Correlation Between Agnico Eagle and Sokoman Minerals

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

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

Diversification Opportunities for Agnico Eagle and Sokoman Minerals

-0.28

Correlation Coefficient

Agnico Eagle  Sokoman Minerals

Very good diversification

The 3 months correlation between Agnico and Sokoman is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines 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 Agnico Eagle 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 Agnico Eagle Mines 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 Agnico Eagle i.e., Agnico Eagle and Sokoman Minerals go up and down completely randomly.

Pair Corralation between Agnico Eagle and Sokoman Minerals

Considering the 90-day investment horizon Agnico Eagle Mines is expected to under-perform the Sokoman Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Agnico Eagle Mines is 4.65 times less risky than Sokoman Minerals. The stock trades about -0.07 of its potential returns per unit of risk. The Sokoman Minerals Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2.93  in Sokoman Minerals Corp on August 20, 2024 and sell it today you would lose (0.23) from holding Sokoman Minerals Corp or give up 7.85% of portfolio value over 90 days.

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

Agnico Eagle Mines  vs.  Sokoman Minerals Corp

Agnico Eagle Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agnico Eagle Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Agnico Eagle is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Sokoman Minerals Corp

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sokoman Minerals Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Sokoman Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agnico Eagle and Sokoman Minerals

The main advantage of trading using opposite Agnico Eagle and Sokoman Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agnico Eagle 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 Agnico Eagle Mines 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.