Correlation Between Loncor Gold and TRU Precious

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

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

Diversification Opportunities for Loncor Gold and TRU Precious

0.0

Correlation Coefficient

Loncor Gold  TRU Precious

Pay attention - limited upside

The 3 months correlation between Loncor and TRU is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Loncor Gold and TRU Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRU Precious Metals and Loncor 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 Loncor Gold are associated (or correlated) with TRU Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRU Precious Metals has no effect on the direction of Loncor Gold i.e., Loncor Gold and TRU Precious go up and down completely randomly.

Pair Corralation between Loncor Gold and TRU Precious

If you would invest  1.02  in TRU Precious Metals on December 27, 2024 and sell it today you would earn a total of  0.00  from holding TRU Precious Metals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Loncor Gold  vs.  TRU Precious Metals

Loncor Gold

Risk-Adjusted Performance

Very Weak

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

TRU Precious Metals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TRU Precious Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, TRU Precious reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loncor Gold and TRU Precious

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

The idea behind Loncor Gold and TRU Precious Metals 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.