Correlation Between Perseus Mining and ITALIAN WINE

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

Diversification Opportunities for Perseus Mining and ITALIAN WINE

-0.25

Correlation Coefficient

Perseus Mining  ITALIAN WINE

Very good diversification

The 3 months correlation between Perseus and ITALIAN is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS 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 ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of Perseus Mining i.e., Perseus Mining and ITALIAN WINE go up and down completely randomly.

Pair Corralation between Perseus Mining and ITALIAN WINE

Assuming the 90 days horizon Perseus Mining Limited is expected to generate 1.05 times more return on investment than ITALIAN WINE. However, Perseus Mining is 1.05 times more volatile than ITALIAN WINE BRANDS. It trades about 0.09 of its potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about 0.0 per unit of risk. If you would invest  159.00  in Perseus Mining Limited on November 28, 2024 and sell it today you would earn a total of  16.00  from holding Perseus Mining Limited or generate 10.06% 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.  ITALIAN WINE BRANDS

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 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 March 2025.

ITALIAN WINE BRANDS

Risk-Adjusted Performance

Very Weak

Over the last 90 days ITALIAN WINE BRANDS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ITALIAN WINE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Perseus Mining and ITALIAN WINE

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

The idea behind Perseus Mining Limited and ITALIAN WINE BRANDS 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.