Correlation Between Perseus Mining and APPLIED MATERIALS

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

Diversification Opportunities for Perseus Mining and APPLIED MATERIALS

-0.47

Correlation Coefficient

Perseus Mining  APPLIED MATERIALS

Very good diversification

The 3 months correlation between Perseus and APPLIED is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS 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 APPLIED MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLIED MATERIALS has no effect on the direction of Perseus Mining i.e., Perseus Mining and APPLIED MATERIALS go up and down completely randomly.

Pair Corralation between Perseus Mining and APPLIED MATERIALS

Assuming the 90 days horizon Perseus Mining Limited is expected to generate 0.8 times more return on investment than APPLIED MATERIALS. However, Perseus Mining Limited is 1.25 times less risky than APPLIED MATERIALS. It trades about 0.16 of its potential returns per unit of risk. APPLIED MATERIALS is currently generating about -0.07 per unit of risk. If you would invest  152.00  in Perseus Mining Limited on December 23, 2024 and sell it today you would earn a total of  31.00  from holding Perseus Mining Limited or generate 20.39% return on investment over 90 days.

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

Perseus Mining Limited  vs.  APPLIED MATERIALS

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 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Perseus Mining reported solid returns over the last few months and may actually be approaching a breakup point.

APPLIED MATERIALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days APPLIED MATERIALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Perseus Mining and APPLIED MATERIALS

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

The idea behind Perseus Mining Limited and APPLIED MATERIALS 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.