Correlation Between Soma Gold and Aben Resources

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

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

Diversification Opportunities for Soma Gold and Aben Resources

0.44

Correlation Coefficient

Soma Gold  Aben Resources

Very weak diversification

The 3 months correlation between Soma and Aben is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Soma Gold Corp and Aben Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aben Resources and Soma 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 Soma Gold Corp are associated (or correlated) with Aben Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aben Resources has no effect on the direction of Soma Gold i.e., Soma Gold and Aben Resources go up and down completely randomly.

Pair Corralation between Soma Gold and Aben Resources

Assuming the 90 days horizon Soma Gold is expected to generate 12.66 times less return on investment than Aben Resources. But when comparing it to its historical volatility, Soma Gold Corp is 2.59 times less risky than Aben Resources. It trades about 0.01 of its potential returns per unit of risk. Aben Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4.90  in Aben Resources on October 10, 2024 and sell it today you would lose (0.80) from holding Aben Resources or give up 16.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Soma Gold Corp  vs.  Aben Resources

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.

Aben Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aben Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Soma Gold and Aben Resources

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

The idea behind Soma Gold Corp and Aben 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.