Correlation Between Sokoman Minerals and Labrador Gold

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

Diversification Opportunities for Sokoman Minerals and Labrador Gold

0.53

Correlation Coefficient

Sokoman Minerals  Labrador Gold

Very weak diversification

The 3 months correlation between Sokoman and Labrador is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sokoman Minerals Corp and Labrador Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Gold Corp 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 Labrador Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Gold Corp has no effect on the direction of Sokoman Minerals i.e., Sokoman Minerals and Labrador Gold go up and down completely randomly.

Pair Corralation between Sokoman Minerals and Labrador Gold

Assuming the 90 days horizon Sokoman Minerals Corp is expected to generate 1.13 times more return on investment than Labrador Gold. However, Sokoman Minerals is 1.13 times more volatile than Labrador Gold Corp. It trades about 0.03 of its potential returns per unit of risk. Labrador Gold Corp is currently generating about -0.04 per unit of risk. If you would invest  3.20  in Sokoman Minerals Corp on September 5, 2024 and sell it today you would lose (0.30) from holding Sokoman Minerals Corp or give up 9.37% of portfolio value over 90 days.

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

Sokoman Minerals Corp  vs.  Labrador Gold Corp

Sokoman Minerals Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sokoman Minerals Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Sokoman Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Labrador Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sokoman Minerals and Labrador Gold

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

The idea behind Sokoman Minerals Corp and Labrador 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.