Correlation Between Canadian General and Perseus Mining

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

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

Diversification Opportunities for Canadian General and Perseus Mining

0.5

Correlation Coefficient

Canadian General  Perseus Mining

Very weak diversification

The 3 months correlation between Canadian and Perseus is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Perseus Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Canadian General 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 Canadian General Investments 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 Canadian General i.e., Canadian General and Perseus Mining go up and down completely randomly.

Pair Corralation between Canadian General and Perseus Mining

Assuming the 90 days trading horizon Canadian General is expected to generate 13.51 times less return on investment than Perseus Mining. But when comparing it to its historical volatility, Canadian General Investments is 16.38 times less risky than Perseus Mining. It trades about 0.17 of its potential returns per unit of risk. Perseus Mining is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  97.00  in Perseus Mining on September 12, 2024 and sell it today you would earn a total of  153.00  from holding Perseus Mining or generate 157.73% return on investment over 90 days.

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

Canadian General Investments  vs.  Perseus Mining

Canadian General Inv

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian General Investments are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Canadian General may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Perseus Mining

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Perseus Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian General and Perseus Mining

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

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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.