Correlation Between Thor Explorations and Loncor Resources
Can any of the company-specific risk be diversified away by investing in both Thor Explorations 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 Thor Explorations and Loncor Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Explorations and Loncor Resources, you can compare the effects of market volatilities on Thor Explorations 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 Thor Explorations with a short position of Loncor Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Explorations and Loncor Resources.
Diversification Opportunities for Thor Explorations and Loncor Resources
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Thor and Loncor is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Thor Explorations and Loncor Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loncor Resources and Thor Explorations 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 Thor Explorations 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 Thor Explorations i.e., Thor Explorations and Loncor Resources go up and down completely randomly.
Pair Corralation between Thor Explorations and Loncor Resources
Assuming the 90 days horizon Thor Explorations is expected to generate 0.37 times more return on investment than Loncor Resources. However, Thor Explorations is 2.69 times less risky than Loncor Resources. It trades about 0.32 of its potential returns per unit of risk. Loncor Resources is currently generating about 0.06 per unit of risk. If you would invest 30.00 in Thor Explorations on November 4, 2024 and sell it today you would earn a total of 5.00 from holding Thor Explorations or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thor Explorations vs. Loncor Resources
Performance |
| Timeline |
| Thor Explorations |
| Loncor Resources |
Thor Explorations and Loncor Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Explorations and Loncor Resources
The main advantage of trading using opposite Thor Explorations and Loncor Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Explorations 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.| Thor Explorations vs. Sarama Resource | Thor Explorations vs. Taranis Resources | Thor Explorations vs. Teras Resources |
Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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