Correlation Between Perseus Mining and POSBO UNSPADRS/20YC1

Can any of the company-specific risk be diversified away by investing in both Perseus Mining and POSBO UNSPADRS/20YC1 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 Perseus Mining and POSBO UNSPADRS/20YC1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perseus Mining Limited and POSBO UNSPADRS20YC1, you can compare the effects of market volatilities on Perseus Mining and POSBO UNSPADRS/20YC1 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 Perseus Mining with a short position of POSBO UNSPADRS/20YC1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perseus Mining and POSBO UNSPADRS/20YC1.

Diversification Opportunities for Perseus Mining and POSBO UNSPADRS/20YC1

-0.16

Correlation Coefficient

Perseus Mining  POSBO UNSPADRS/20YC1

Good diversification

The 3 months correlation between Perseus and POSBO is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and POSBO UNSPADRS20YC1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSBO UNSPADRS/20YC1 and Perseus 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 Perseus Mining Limited are associated (or correlated) with POSBO UNSPADRS/20YC1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSBO UNSPADRS/20YC1 has no effect on the direction of Perseus Mining i.e., Perseus Mining and POSBO UNSPADRS/20YC1 go up and down completely randomly.

Pair Corralation between Perseus Mining and POSBO UNSPADRS/20YC1

Assuming the 90 days horizon Perseus Mining is expected to generate 1.05 times less return on investment than POSBO UNSPADRS/20YC1. But when comparing it to its historical volatility, Perseus Mining Limited is 1.22 times less risky than POSBO UNSPADRS/20YC1. It trades about 0.2 of its potential returns per unit of risk. POSBO UNSPADRS20YC1 is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,037  in POSBO UNSPADRS20YC1 on October 22, 2024 and sell it today you would earn a total of  53.00  from holding POSBO UNSPADRS20YC1 or generate 5.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Perseus Mining Limited  vs.  POSBO UNSPADRS20YC1

Perseus Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perseus Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

POSBO UNSPADRS/20YC1

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in POSBO UNSPADRS20YC1 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, POSBO UNSPADRS/20YC1 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Perseus Mining and POSBO UNSPADRS/20YC1

The main advantage of trading using opposite Perseus Mining and POSBO UNSPADRS/20YC1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perseus Mining position performs unexpectedly, POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1 will offset losses from the drop in POSBO UNSPADRS/20YC1's long position.

The idea behind Perseus Mining Limited and POSBO UNSPADRS20YC1 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.