Correlation Between Perseus Mining and International Consolidated

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

Diversification Opportunities for Perseus Mining and International Consolidated

0.13

Correlation Coefficient

Perseus Mining  International Consolidated

Average diversification

The 3 months correlation between Perseus and International is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Perseus Mining i.e., Perseus Mining and International Consolidated go up and down completely randomly.

Pair Corralation between Perseus Mining and International Consolidated

Assuming the 90 days horizon Perseus Mining is expected to generate 2.22 times less return on investment than International Consolidated. In addition to that, Perseus Mining is 1.46 times more volatile than International Consolidated Airlines. It trades about 0.03 of its total potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.1 per unit of volatility. If you would invest  143.00  in International Consolidated Airlines on September 14, 2024 and sell it today you would earn a total of  205.00  from holding International Consolidated Airlines or generate 143.36% 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.  International Consolidated Air

Perseus Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Perseus Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

International Consolidated

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, International Consolidated reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perseus Mining and International Consolidated

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

The idea behind Perseus Mining Limited and International Consolidated Airlines 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.