Correlation Between Sokoman Minerals and Torex Gold

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

Diversification Opportunities for Sokoman Minerals and Torex Gold

-0.23

Correlation Coefficient

Sokoman Minerals  Torex Gold

Very good diversification

The 3 months correlation between Sokoman and Torex is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sokoman Minerals Corp and Torex Gold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torex Gold 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 Torex Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torex Gold Resources has no effect on the direction of Sokoman Minerals i.e., Sokoman Minerals and Torex Gold go up and down completely randomly.

Pair Corralation between Sokoman Minerals and Torex Gold

Assuming the 90 days horizon Sokoman Minerals Corp is expected to generate 2.82 times more return on investment than Torex Gold. However, Sokoman Minerals is 2.82 times more volatile than Torex Gold Resources. It trades about 0.02 of its potential returns per unit of risk. Torex Gold Resources is currently generating about 0.03 per unit of risk. If you would invest  2.89  in Sokoman Minerals Corp on September 14, 2024 and sell it today you would lose (0.49) from holding Sokoman Minerals Corp or give up 16.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sokoman Minerals Corp  vs.  Torex Gold Resources

Sokoman Minerals Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sokoman Minerals Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Sokoman Minerals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Torex Gold Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Torex Gold Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Torex Gold is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sokoman Minerals and Torex Gold

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

The idea behind Sokoman Minerals Corp and Torex Gold 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.