Correlation Between World Copper and Loncor Resources

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

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

Diversification Opportunities for World Copper and Loncor Resources

-0.75

Correlation Coefficient

World Copper  Loncor Resources

Pay attention - limited upside

The 3 months correlation between World and Loncor is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding World Copper and Loncor Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loncor Resources and World Copper 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 World Copper are associated (or correlated) with Loncor Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loncor Resources has no effect on the direction of World Copper i.e., World Copper and Loncor Resources go up and down completely randomly.

Pair Corralation between World Copper and Loncor Resources

Assuming the 90 days horizon World Copper is expected to under-perform the Loncor Resources. In addition to that, World Copper is 2.13 times more volatile than Loncor Resources. It trades about -0.03 of its total potential returns per unit of risk. Loncor Resources is currently generating about 0.25 per unit of volatility. If you would invest  49.00  in Loncor Resources on October 20, 2024 and sell it today you would earn a total of  8.00  from holding Loncor Resources or generate 16.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

World Copper  vs.  Loncor Resources

World Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days World Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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.

Pair Trading with World Copper and Loncor Resources

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

The idea behind World Copper and Loncor Resources 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.