Correlation Between Brockhaus Capital and Perseus Mining

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

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

Diversification Opportunities for Brockhaus Capital and Perseus Mining

0.33

Correlation Coefficient

Brockhaus Capital  Perseus Mining

Weak diversification

The 3 months correlation between Brockhaus and Perseus is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Brockhaus Capital Management and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Brockhaus Capital 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 Brockhaus Capital Management 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 Brockhaus Capital i.e., Brockhaus Capital and Perseus Mining go up and down completely randomly.

Pair Corralation between Brockhaus Capital and Perseus Mining

Assuming the 90 days trading horizon Brockhaus Capital is expected to generate 1.63 times less return on investment than Perseus Mining. But when comparing it to its historical volatility, Brockhaus Capital Management is 1.03 times less risky than Perseus Mining. It trades about 0.02 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  120.00  in Perseus Mining Limited on September 23, 2024 and sell it today you would earn a total of  35.00  from holding Perseus Mining Limited or generate 29.17% return on investment over 90 days.

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

Brockhaus Capital Management  vs.  Perseus Mining Limited

Brockhaus Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Brockhaus Capital and Perseus Mining

The main advantage of trading using opposite Brockhaus Capital and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brockhaus Capital 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 Brockhaus Capital Management 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.