Correlation Between Perseus Mining and Alaska Air

Can any of the company-specific risk be diversified away by investing in both Perseus Mining and Alaska Air 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 Alaska Air 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 Alaska Air Group, you can compare the effects of market volatilities on Perseus Mining and Alaska Air 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 Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perseus Mining and Alaska Air.

Diversification Opportunities for Perseus Mining and Alaska Air

-0.15

Correlation Coefficient

Perseus Mining  Alaska Air

Good diversification

The 3 months correlation between Perseus and Alaska is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group 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 Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of Perseus Mining i.e., Perseus Mining and Alaska Air go up and down completely randomly.

Pair Corralation between Perseus Mining and Alaska Air

Assuming the 90 days horizon Perseus Mining Limited is expected to under-perform the Alaska Air. But the stock apears to be less risky and, when comparing its historical volatility, Perseus Mining Limited is 1.29 times less risky than Alaska Air. The stock trades about -0.01 of its potential returns per unit of risk. The Alaska Air Group is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  3,729  in Alaska Air Group on September 24, 2024 and sell it today you would earn a total of  2,519  from holding Alaska Air Group or generate 67.55% return on investment over 90 days.

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

Perseus Mining Limited  vs.  Alaska Air Group

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 nearly stable basic indicators, Perseus Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Alaska Air Group

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alaska Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perseus Mining and Alaska Air

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

The idea behind Perseus Mining Limited and Alaska Air Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..