Correlation Between Nicola Mining and Perseus Mining

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

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

Diversification Opportunities for Nicola Mining and Perseus Mining

0.73

Correlation Coefficient

Nicola Mining  Perseus Mining

Poor diversification

The 3 months correlation between Nicola and Perseus is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nicola Mining and Perseus Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Nicola Mining 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 Nicola Mining 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 Nicola Mining i.e., Nicola Mining and Perseus Mining go up and down completely randomly.

Pair Corralation between Nicola Mining and Perseus Mining

Assuming the 90 days horizon Nicola Mining is expected to generate 2.41 times more return on investment than Perseus Mining. However, Nicola Mining is 2.41 times more volatile than Perseus Mining. It trades about 0.14 of its potential returns per unit of risk. Perseus Mining is currently generating about 0.25 per unit of risk. If you would invest  29.00  in Nicola Mining on December 30, 2024 and sell it today you would earn a total of  11.00  from holding Nicola Mining or generate 37.93% return on investment over 90 days.

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

Nicola Mining  vs.  Perseus Mining

Nicola Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nicola Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nicola Mining showed 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 Nicola Mining and Perseus Mining

The main advantage of trading using opposite Nicola Mining and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nicola Mining 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 Nicola Mining 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.