Correlation Between Catalyst Metals and Perseus Mining

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

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

Diversification Opportunities for Catalyst Metals and Perseus Mining

0.93

Correlation Coefficient

Catalyst Metals  Perseus Mining

Almost no diversification

The 3 months correlation between Catalyst and Perseus is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Metals and Perseus Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Catalyst Metals 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 Catalyst Metals 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 Catalyst Metals i.e., Catalyst Metals and Perseus Mining go up and down completely randomly.

Pair Corralation between Catalyst Metals and Perseus Mining

Assuming the 90 days trading horizon Catalyst Metals is expected to generate 2.18 times more return on investment than Perseus Mining. However, Catalyst Metals is 2.18 times more volatile than Perseus Mining. It trades about 0.3 of its potential returns per unit of risk. Perseus Mining is currently generating about 0.23 per unit of risk. If you would invest  263.00  in Catalyst Metals on December 30, 2024 and sell it today you would earn a total of  288.00  from holding Catalyst Metals or generate 109.51% return on investment over 90 days.

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

Catalyst Metals  vs.  Perseus Mining

Catalyst Metals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Metals are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Catalyst Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Perseus Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Perseus Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catalyst Metals and Perseus Mining

The main advantage of trading using opposite Catalyst Metals and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Metals 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 Catalyst Metals 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.