Correlation Between Perseus Mining and ORMAT TECHNOLOGIES

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

Diversification Opportunities for Perseus Mining and ORMAT TECHNOLOGIES

0.01

Correlation Coefficient

Perseus Mining  ORMAT TECHNOLOGIES

Significant diversification

The 3 months correlation between Perseus and ORMAT is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORMAT TECHNOLOGIES has no effect on the direction of Perseus Mining i.e., Perseus Mining and ORMAT TECHNOLOGIES go up and down completely randomly.

Pair Corralation between Perseus Mining and ORMAT TECHNOLOGIES

Assuming the 90 days horizon Perseus Mining Limited is expected to generate 1.33 times more return on investment than ORMAT TECHNOLOGIES. However, Perseus Mining is 1.33 times more volatile than ORMAT TECHNOLOGIES. It trades about 0.17 of its potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about 0.02 per unit of risk. If you would invest  151.00  in Perseus Mining Limited on December 29, 2024 and sell it today you would earn a total of  36.00  from holding Perseus Mining Limited or generate 23.84% return on investment over 90 days.

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

Perseus Mining Limited  vs.  ORMAT TECHNOLOGIES

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

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ORMAT TECHNOLOGIES are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ORMAT TECHNOLOGIES is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Perseus Mining and ORMAT TECHNOLOGIES

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

The idea behind Perseus Mining Limited and ORMAT TECHNOLOGIES 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.