Correlation Between Perseus Mining and Idemitsu Kosan

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

Diversification Opportunities for Perseus Mining and Idemitsu Kosan

0.29

Correlation Coefficient

Perseus Mining  Idemitsu Kosan

Modest diversification

The 3 months correlation between Perseus and Idemitsu is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Idemitsu Kosan CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idemitsu Kosan CoLtd 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 Idemitsu Kosan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idemitsu Kosan CoLtd has no effect on the direction of Perseus Mining i.e., Perseus Mining and Idemitsu Kosan go up and down completely randomly.

Pair Corralation between Perseus Mining and Idemitsu Kosan

Assuming the 90 days horizon Perseus Mining is expected to generate 1.13 times less return on investment than Idemitsu Kosan. In addition to that, Perseus Mining is 1.28 times more volatile than Idemitsu Kosan CoLtd. It trades about 0.04 of its total potential returns per unit of risk. Idemitsu Kosan CoLtd is currently generating about 0.06 per unit of volatility. If you would invest  394.00  in Idemitsu Kosan CoLtd on December 4, 2024 and sell it today you would earn a total of  251.00  from holding Idemitsu Kosan CoLtd or generate 63.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Perseus Mining Limited  vs.  Idemitsu Kosan CoLtd

Perseus Mining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Perseus Mining may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Idemitsu Kosan CoLtd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Idemitsu Kosan CoLtd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Idemitsu Kosan is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Perseus Mining and Idemitsu Kosan

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

The idea behind Perseus Mining Limited and Idemitsu Kosan CoLtd 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.