Correlation Between EMCOR and Perseus Mining

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

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

Diversification Opportunities for EMCOR and Perseus Mining

-0.22

Correlation Coefficient

EMCOR  Perseus Mining

Very good diversification

The 3 months correlation between EMCOR and Perseus is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and EMCOR 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 EMCOR Group 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 EMCOR i.e., EMCOR and Perseus Mining go up and down completely randomly.

Pair Corralation between EMCOR and Perseus Mining

Considering the 90-day investment horizon EMCOR Group is expected to generate 0.65 times more return on investment than Perseus Mining. However, EMCOR Group is 1.55 times less risky than Perseus Mining. It trades about 0.16 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about 0.04 per unit of risk. If you would invest  40,247  in EMCOR Group on September 14, 2024 and sell it today you would earn a total of  7,778  from holding EMCOR Group or generate 19.33% return on investment over 90 days.

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

EMCOR Group  vs.  Perseus Mining Limited

EMCOR Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather sluggish primary indicators, EMCOR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Perseus Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Perseus Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with EMCOR and Perseus Mining

The main advantage of trading using opposite EMCOR and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR 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 EMCOR Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.