Correlation Between Copa Holdings and Perseus Mining

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

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

Diversification Opportunities for Copa Holdings and Perseus Mining

0.53

Correlation Coefficient

Copa Holdings  Perseus Mining

Very weak diversification

The 3 months correlation between Copa and Perseus is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Copa Holdings 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 Copa Holdings SA 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 Copa Holdings i.e., Copa Holdings and Perseus Mining go up and down completely randomly.

Pair Corralation between Copa Holdings and Perseus Mining

Considering the 90-day investment horizon Copa Holdings is expected to generate 1.44 times less return on investment than Perseus Mining. But when comparing it to its historical volatility, Copa Holdings SA is 1.38 times less risky than Perseus Mining. It trades about 0.08 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  163.00  in Perseus Mining Limited on October 23, 2024 and sell it today you would earn a total of  5.00  from holding Perseus Mining Limited or generate 3.07% return on investment over 90 days.

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

Copa Holdings SA  vs.  Perseus Mining Limited

Copa Holdings SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Copa Holdings SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Copa Holdings and Perseus Mining

The main advantage of trading using opposite Copa Holdings and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings 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 Copa Holdings SA 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.