Correlation Between Caspian Services and Perseus Mining

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

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

Diversification Opportunities for Caspian Services and Perseus Mining

-0.28

Correlation Coefficient

Caspian Services  Perseus Mining

Very good diversification

The 3 months correlation between Caspian and Perseus is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Caspian Services and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Caspian Services 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 Caspian Services 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 Caspian Services i.e., Caspian Services and Perseus Mining go up and down completely randomly.

Pair Corralation between Caspian Services and Perseus Mining

Given the investment horizon of 90 days Caspian Services is expected to generate 3.91 times more return on investment than Perseus Mining. However, Caspian Services is 3.91 times more volatile than Perseus Mining Limited. It trades about 0.13 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about -0.02 per unit of risk. If you would invest  0.21  in Caspian Services on October 8, 2024 and sell it today you would earn a total of  0.19  from holding Caspian Services or generate 90.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Caspian Services  vs.  Perseus Mining Limited

Caspian Services

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caspian Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Caspian Services showed solid returns over the last few months and may actually be approaching a breakup point.

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 Caspian Services and Perseus Mining

The main advantage of trading using opposite Caspian Services and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caspian Services 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 Caspian Services 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.