Correlation Between Loncor Resources and Century Global

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

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

Diversification Opportunities for Loncor Resources and Century Global

-0.41

Correlation Coefficient

Loncor Resources  Century Global

Very good diversification

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

Pair Corralation between Loncor Resources and Century Global

Assuming the 90 days horizon Loncor Resources is expected to generate 0.52 times more return on investment than Century Global. However, Loncor Resources is 1.91 times less risky than Century Global. It trades about 0.05 of its potential returns per unit of risk. Century Global Commodities is currently generating about 0.01 per unit of risk. If you would invest  33.00  in Loncor Resources on October 21, 2024 and sell it today you would earn a total of  24.00  from holding Loncor Resources or generate 72.73% return on investment over 90 days.

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

Loncor Resources  vs.  Century Global Commodities

Loncor Resources

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Loncor Resources are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Loncor Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Century Global Commo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Century Global Commodities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Loncor Resources and Century Global

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

The idea behind Loncor Resources and Century Global Commodities 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.