Correlation Between Maple Gold and Soma Gold

Can any of the company-specific risk be diversified away by investing in both Maple 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 Maple 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 Maple Gold Mines and Soma Gold Corp, you can compare the effects of market volatilities on Maple 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 Maple Gold with a short position of Soma Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Gold and Soma Gold.

Diversification Opportunities for Maple Gold and Soma Gold

0.43

Correlation Coefficient

Maple Gold  Soma Gold

Very weak diversification

The 3 months correlation between Maple and Soma is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Maple Gold Mines 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 Maple 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 Maple Gold Mines 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 Maple Gold i.e., Maple Gold and Soma Gold go up and down completely randomly.

Pair Corralation between Maple Gold and Soma Gold

Assuming the 90 days horizon Maple Gold is expected to generate 1.29 times less return on investment than Soma Gold. In addition to that, Maple Gold is 2.14 times more volatile than Soma Gold Corp. It trades about 0.06 of its total potential returns per unit of risk. Soma Gold Corp is currently generating about 0.15 per unit of volatility. If you would invest  36.00  in Soma Gold Corp on December 19, 2024 and sell it today you would earn a total of  12.00  from holding Soma Gold Corp or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Maple Gold Mines  vs.  Soma Gold Corp

Maple Gold Mines

Risk-Adjusted Performance

Weak

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

Soma Gold Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Soma Gold Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Soma Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maple Gold and Soma Gold

The main advantage of trading using opposite Maple Gold and Soma Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple 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 Maple Gold Mines 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.