Correlation Between LANSON BCC and Western Copper

Can any of the company-specific risk be diversified away by investing in both LANSON BCC and Western Copper 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 LANSON BCC and Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LANSON BCC INH EO and Western Copper and, you can compare the effects of market volatilities on LANSON BCC and Western Copper 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 LANSON BCC with a short position of Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of LANSON BCC and Western Copper.

Diversification Opportunities for LANSON BCC and Western Copper

0.41

Correlation Coefficient

LANSON BCC  Western Copper

Very weak diversification

The 3 months correlation between LANSON and Western is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding LANSON BCC INH EO and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and LANSON BCC 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 LANSON BCC INH EO are associated (or correlated) with Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of LANSON BCC i.e., LANSON BCC and Western Copper go up and down completely randomly.

Pair Corralation between LANSON BCC and Western Copper

Assuming the 90 days horizon LANSON BCC INH EO is expected to generate 0.68 times more return on investment than Western Copper. However, LANSON BCC INH EO is 1.48 times less risky than Western Copper. It trades about 0.22 of its potential returns per unit of risk. Western Copper and is currently generating about -0.08 per unit of risk. If you would invest  3,300  in LANSON BCC INH EO on October 4, 2024 and sell it today you would earn a total of  160.00  from holding LANSON BCC INH EO or generate 4.85% return on investment over 90 days.

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

LANSON BCC INH EO  vs.  Western Copper and

LANSON BCC INH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LANSON BCC INH EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Western Copper

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with LANSON BCC and Western Copper

The main advantage of trading using opposite LANSON BCC and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LANSON BCC position performs unexpectedly, Western Copper 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 Western Copper will offset losses from the drop in Western Copper's long position.

The idea behind LANSON BCC INH EO and Western Copper and 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.