Correlation Between Balkan Mining and Perseus Mining

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

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

Diversification Opportunities for Balkan Mining and Perseus Mining

0.24

Correlation Coefficient

Balkan Mining  Perseus Mining

Modest diversification

The 3 months correlation between Balkan and Perseus is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Balkan Mining and and Perseus Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Balkan Mining 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 Balkan Mining and 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 Balkan Mining i.e., Balkan Mining and Perseus Mining go up and down completely randomly.

Pair Corralation between Balkan Mining and Perseus Mining

Assuming the 90 days trading horizon Balkan Mining is expected to generate 1.41 times less return on investment than Perseus Mining. In addition to that, Balkan Mining is 2.4 times more volatile than Perseus Mining. It trades about 0.05 of its total potential returns per unit of risk. Perseus Mining is currently generating about 0.18 per unit of volatility. If you would invest  259.00  in Perseus Mining on October 22, 2024 and sell it today you would earn a total of  10.00  from holding Perseus Mining or generate 3.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Balkan Mining and  vs.  Perseus Mining

Balkan Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balkan Mining and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Perseus Mining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Balkan Mining and Perseus Mining

The main advantage of trading using opposite Balkan Mining and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balkan Mining 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 Balkan Mining and and Perseus Mining 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.