Correlation Between Beach Energy and Perseus Mining
Can any of the company-specific risk be diversified away by investing in both Beach Energy 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 Beach Energy and Perseus Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beach Energy and Perseus Mining, you can compare the effects of market volatilities on Beach Energy 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 Beach Energy with a short position of Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beach Energy and Perseus Mining.
Diversification Opportunities for Beach Energy and Perseus Mining
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Beach and Perseus is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Beach Energy and Perseus Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Beach Energy 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 Beach Energy 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 Beach Energy i.e., Beach Energy and Perseus Mining go up and down completely randomly.
Pair Corralation between Beach Energy and Perseus Mining
Assuming the 90 days trading horizon Beach Energy is expected to generate 1.33 times more return on investment than Perseus Mining. However, Beach Energy is 1.33 times more volatile than Perseus Mining. It trades about 0.21 of its potential returns per unit of risk. Perseus Mining is currently generating about -0.02 per unit of risk. If you would invest 127.00 in Beach Energy on October 4, 2024 and sell it today you would earn a total of 15.00 from holding Beach Energy or generate 11.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
Beach Energy vs. Perseus Mining
Performance |
Timeline |
Beach Energy |
Perseus Mining |
Beach Energy and Perseus Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Beach Energy and Perseus Mining
The main advantage of trading using opposite Beach Energy and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beach Energy 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.Beach Energy vs. Aussie Broadband | Beach Energy vs. Iron Road | Beach Energy vs. MFF Capital Investments | Beach Energy vs. Hudson Investment Group |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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