Correlation Between Mineros SA and Perseus Mining

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

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

Diversification Opportunities for Mineros SA and Perseus Mining

0.85

Correlation Coefficient

Mineros SA  Perseus Mining

Very poor diversification

The 3 months correlation between Mineros and Perseus is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mineros SA and Perseus Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Mineros SA 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 Mineros 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 Mineros SA i.e., Mineros SA and Perseus Mining go up and down completely randomly.

Pair Corralation between Mineros SA and Perseus Mining

Assuming the 90 days trading horizon Mineros SA is expected to generate 2.19 times more return on investment than Perseus Mining. However, Mineros SA is 2.19 times more volatile than Perseus Mining. It trades about 0.17 of its potential returns per unit of risk. Perseus Mining is currently generating about 0.25 per unit of risk. If you would invest  151.00  in Mineros SA on December 30, 2024 and sell it today you would earn a total of  72.00  from holding Mineros SA or generate 47.68% return on investment over 90 days.

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

Mineros SA  vs.  Perseus Mining

Mineros SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mineros SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Mineros SA displayed 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 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Perseus Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mineros SA and Perseus Mining

The main advantage of trading using opposite Mineros SA and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mineros SA 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 Mineros SA 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.