Correlation Between Perseus Mining and Ribbon Communications

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

Diversification Opportunities for Perseus Mining and Ribbon Communications

0.48

Correlation Coefficient

Perseus Mining  Ribbon Communications

Very weak diversification

The 3 months correlation between Perseus and Ribbon is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Ribbon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ribbon Communications 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 Ribbon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ribbon Communications has no effect on the direction of Perseus Mining i.e., Perseus Mining and Ribbon Communications go up and down completely randomly.

Pair Corralation between Perseus Mining and Ribbon Communications

Assuming the 90 days horizon Perseus Mining is expected to generate 4.02 times less return on investment than Ribbon Communications. But when comparing it to its historical volatility, Perseus Mining Limited is 1.42 times less risky than Ribbon Communications. It trades about 0.04 of its potential returns per unit of risk. Ribbon Communications is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  372.00  in Ribbon Communications on December 1, 2024 and sell it today you would earn a total of  82.00  from holding Ribbon Communications or generate 22.04% return on investment over 90 days.

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

Perseus Mining Limited  vs.  Ribbon Communications

Perseus Mining

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Perseus Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ribbon Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ribbon Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Ribbon Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perseus Mining and Ribbon Communications

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

The idea behind Perseus Mining Limited and Ribbon Communications 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.