Correlation Between TT Electronics and Perseus Mining

Can any of the company-specific risk be diversified away by investing in both TT Electronics and Perseus Mining 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 TT Electronics and Perseus Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TT Electronics PLC and Perseus Mining Limited, you can compare the effects of market volatilities on TT Electronics and Perseus Mining 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 TT Electronics with a short position of Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of TT Electronics and Perseus Mining.

Diversification Opportunities for TT Electronics and Perseus Mining

-0.17

Correlation Coefficient

TT Electronics  Perseus Mining

Good diversification

The 3 months correlation between 7TT and Perseus is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and TT Electronics 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 TT Electronics PLC are associated (or correlated) with Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of TT Electronics i.e., TT Electronics and Perseus Mining go up and down completely randomly.

Pair Corralation between TT Electronics and Perseus Mining

Assuming the 90 days trading horizon TT Electronics PLC is expected to generate 2.48 times more return on investment than Perseus Mining. However, TT Electronics is 2.48 times more volatile than Perseus Mining Limited. It trades about 0.18 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about 0.0 per unit of risk. If you would invest  88.00  in TT Electronics PLC on October 11, 2024 and sell it today you would earn a total of  33.00  from holding TT Electronics PLC or generate 37.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.44%
Values	Daily Returns

TT Electronics PLC  vs.  Perseus Mining Limited

TT Electronics PLC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TT Electronics PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, TT Electronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Perseus Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perseus Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Perseus Mining is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TT Electronics and Perseus Mining

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

The idea behind TT Electronics PLC and Perseus Mining Limited 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.