Correlation Between Lundin Gold and Esprinet SpA

Can any of the company-specific risk be diversified away by investing in both Lundin Gold and Esprinet SpA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lundin Gold and Esprinet SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lundin Gold and Esprinet SpA, you can compare the effects of market volatilities on Lundin Gold and Esprinet SpA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lundin Gold with a short position of Esprinet SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Gold and Esprinet SpA.

Diversification Opportunities for Lundin Gold and Esprinet SpA

-0.85

Correlation Coefficient

Lundin Gold  Esprinet SpA

Pay attention - limited upside

The 3 months correlation between Lundin and Esprinet is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Gold and Esprinet SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esprinet SpA and Lundin Gold is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lundin Gold are associated (or correlated) with Esprinet SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esprinet SpA has no effect on the direction of Lundin Gold i.e., Lundin Gold and Esprinet SpA go up and down completely randomly.

Pair Corralation between Lundin Gold and Esprinet SpA

Assuming the 90 days trading horizon Lundin Gold is expected to generate 0.95 times more return on investment than Esprinet SpA. However, Lundin Gold is 1.05 times less risky than Esprinet SpA. It trades about 0.09 of its potential returns per unit of risk. Esprinet SpA is currently generating about -0.03 per unit of risk. If you would invest  3,545  in Lundin Gold on April 24, 2025 and sell it today you would earn a total of  581.00  from holding Lundin Gold or generate 16.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Lundin Gold  vs.  Esprinet SpA

Lundin Gold

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lundin Gold are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Lundin Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Esprinet SpA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Esprinet SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Esprinet SpA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lundin Gold and Esprinet SpA

The main advantage of trading using opposite Lundin Gold and Esprinet SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Gold position performs unexpectedly, Esprinet SpA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Esprinet SpA will offset losses from the drop in Esprinet SpA's long position.

The idea behind Lundin Gold and Esprinet SpA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.