Correlation Between Argo Gold and Soma Gold

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

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

Diversification Opportunities for Argo Gold and Soma Gold

-0.04

Correlation Coefficient

Argo Gold  Soma Gold

Good diversification

The 3 months correlation between Argo and Soma is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Argo Gold and Soma Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soma Gold Corp and Argo 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 Argo Gold are associated (or correlated) with Soma Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soma Gold Corp has no effect on the direction of Argo Gold i.e., Argo Gold and Soma Gold go up and down completely randomly.

Pair Corralation between Argo Gold and Soma Gold

Assuming the 90 days horizon Argo Gold is expected to generate 1.53 times more return on investment than Soma Gold. However, Argo Gold is 1.53 times more volatile than Soma Gold Corp. It trades about 0.02 of its potential returns per unit of risk. Soma Gold Corp is currently generating about 0.03 per unit of risk. If you would invest  7.49  in Argo Gold on October 10, 2024 and sell it today you would lose (1.54) from holding Argo Gold or give up 20.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Argo Gold  vs.  Soma Gold Corp

Argo Gold

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Gold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Argo Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Soma Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soma Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Argo Gold and Soma Gold

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

The idea behind Argo Gold and Soma Gold 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..