Correlation Between Lomiko Metals and Commerce Resources

Can any of the company-specific risk be diversified away by investing in both Lomiko Metals and Commerce Resources 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 Lomiko Metals and Commerce Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lomiko Metals and Commerce Resources Corp, you can compare the effects of market volatilities on Lomiko Metals and Commerce Resources 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 Lomiko Metals with a short position of Commerce Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lomiko Metals and Commerce Resources.

Diversification Opportunities for Lomiko Metals and Commerce Resources

0.25

Correlation Coefficient

Lomiko Metals  Commerce Resources

Modest diversification

The 3 months correlation between Lomiko and Commerce is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lomiko Metals and Commerce Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerce Resources Corp and Lomiko Metals 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 Lomiko Metals are associated (or correlated) with Commerce Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerce Resources Corp has no effect on the direction of Lomiko Metals i.e., Lomiko Metals and Commerce Resources go up and down completely randomly.

Pair Corralation between Lomiko Metals and Commerce Resources

Assuming the 90 days horizon Lomiko Metals is expected to generate 1.08 times more return on investment than Commerce Resources. However, Lomiko Metals is 1.08 times more volatile than Commerce Resources Corp. It trades about 0.14 of its potential returns per unit of risk. Commerce Resources Corp is currently generating about -0.07 per unit of risk. If you would invest  13.00  in Lomiko Metals on December 2, 2024 and sell it today you would earn a total of  5.00  from holding Lomiko Metals or generate 38.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Lomiko Metals  vs.  Commerce Resources Corp

Lomiko Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lomiko Metals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lomiko Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Commerce Resources Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Commerce Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Commerce Resources is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Lomiko Metals and Commerce Resources

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

The idea behind Lomiko Metals and Commerce Resources Corp 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 Stocks Directory module to find actively traded stocks across global markets.