Correlation Between Fremont Gold and Sokoman Minerals

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

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

Diversification Opportunities for Fremont Gold and Sokoman Minerals

0.27

Correlation Coefficient

Fremont Gold  Sokoman Minerals

Modest diversification

The 3 months correlation between Fremont and Sokoman is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fremont Gold and Sokoman Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sokoman Minerals Corp and Fremont 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 Fremont Gold are associated (or correlated) with Sokoman Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sokoman Minerals Corp has no effect on the direction of Fremont Gold i.e., Fremont Gold and Sokoman Minerals go up and down completely randomly.

Pair Corralation between Fremont Gold and Sokoman Minerals

Assuming the 90 days horizon Fremont Gold is expected to generate 1.34 times less return on investment than Sokoman Minerals. In addition to that, Fremont Gold is 1.27 times more volatile than Sokoman Minerals Corp. It trades about 0.0 of its total potential returns per unit of risk. Sokoman Minerals Corp is currently generating about 0.01 per unit of volatility. If you would invest  4.00  in Sokoman Minerals Corp on September 27, 2024 and sell it today you would lose (0.50) from holding Sokoman Minerals Corp or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Fremont Gold  vs.  Sokoman Minerals Corp

Fremont Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fremont Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fremont Gold is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sokoman Minerals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sokoman Minerals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sokoman Minerals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fremont Gold and Sokoman Minerals

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

The idea behind Fremont Gold and Sokoman Minerals 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.