Correlation Between Sokoman Minerals and Eloro Resources

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

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

Diversification Opportunities for Sokoman Minerals and Eloro Resources

0.72

Correlation Coefficient

Sokoman Minerals  Eloro Resources

Poor diversification

The 3 months correlation between Sokoman and Eloro is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sokoman Minerals Corp and Eloro Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eloro Resources and Sokoman Minerals 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 Sokoman Minerals Corp are associated (or correlated) with Eloro Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eloro Resources has no effect on the direction of Sokoman Minerals i.e., Sokoman Minerals and Eloro Resources go up and down completely randomly.

Pair Corralation between Sokoman Minerals and Eloro Resources

Assuming the 90 days horizon Sokoman Minerals Corp is expected to generate 3.23 times more return on investment than Eloro Resources. However, Sokoman Minerals is 3.23 times more volatile than Eloro Resources. It trades about 0.1 of its potential returns per unit of risk. Eloro Resources is currently generating about -0.04 per unit of risk. If you would invest  2.33  in Sokoman Minerals Corp on November 29, 2024 and sell it today you would earn a total of  0.92  from holding Sokoman Minerals Corp or generate 39.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.72%
Values	Daily Returns

Sokoman Minerals Corp  vs.  Eloro Resources

Sokoman Minerals Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sokoman Minerals Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Sokoman Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Eloro Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eloro Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic 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 Sokoman Minerals and Eloro Resources

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

The idea behind Sokoman Minerals Corp and Eloro 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 CEOs Directory module to screen CEOs from public companies around the world.