Correlation Between Gateway Real and Perseus Mining

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

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

Diversification Opportunities for Gateway Real and Perseus Mining

-0.16

Correlation Coefficient

Gateway Real  Perseus Mining

Good diversification

The 3 months correlation between Gateway and Perseus is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Gateway Real Estate and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Gateway Real 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 Gateway Real Estate 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 Gateway Real i.e., Gateway Real and Perseus Mining go up and down completely randomly.

Pair Corralation between Gateway Real and Perseus Mining

Assuming the 90 days horizon Gateway Real Estate is expected to generate 12.29 times more return on investment than Perseus Mining. However, Gateway Real is 12.29 times more volatile than Perseus Mining Limited. It trades about 0.09 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about 0.15 per unit of risk. If you would invest  38.00  in Gateway Real Estate on December 21, 2024 and sell it today you would earn a total of  2.00  from holding Gateway Real Estate or generate 5.26% return on investment over 90 days.

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

Gateway Real Estate  vs.  Perseus Mining Limited

Gateway Real Estate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gateway Real Estate are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gateway Real reported solid returns over the last few months and may actually be approaching a breakup point.

Perseus Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Perseus Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gateway Real and Perseus Mining

The main advantage of trading using opposite Gateway Real and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gateway Real 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 Gateway Real Estate 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.