Correlation Between Sokoman Minerals and Timberline Resources

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

Diversification Opportunities for Sokoman Minerals and Timberline Resources

0.56

Correlation Coefficient

Sokoman Minerals  Timberline Resources

Very weak diversification

The 3 months correlation between Sokoman and Timberline is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sokoman Minerals Corp and Timberline Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timberline 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 Timberline Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timberline Resources has no effect on the direction of Sokoman Minerals i.e., Sokoman Minerals and Timberline Resources go up and down completely randomly.

Pair Corralation between Sokoman Minerals and Timberline Resources

If you would invest  2.77  in Sokoman Minerals Corp on August 20, 2024 and sell it today you would lose (0.07) from holding Sokoman Minerals Corp or give up 2.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Sokoman Minerals Corp  vs.  Timberline Resources

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.

Timberline Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timberline Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Timberline Resources is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sokoman Minerals and Timberline Resources

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

The idea behind Sokoman Minerals Corp and Timberline 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.