Correlation Between Perseus Mining and Nippon Yusen

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

Diversification Opportunities for Perseus Mining and Nippon Yusen

0.02

Correlation Coefficient

Perseus Mining  Nippon Yusen

Significant diversification

The 3 months correlation between Perseus and Nippon is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Nippon Yusen Kabushiki in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Yusen Kabushiki 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 Nippon Yusen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Yusen Kabushiki has no effect on the direction of Perseus Mining i.e., Perseus Mining and Nippon Yusen go up and down completely randomly.

Pair Corralation between Perseus Mining and Nippon Yusen

Assuming the 90 days horizon Perseus Mining is expected to generate 1.63 times less return on investment than Nippon Yusen. In addition to that, Perseus Mining is 1.21 times more volatile than Nippon Yusen Kabushiki. It trades about 0.02 of its total potential returns per unit of risk. Nippon Yusen Kabushiki is currently generating about 0.04 per unit of volatility. If you would invest  2,232  in Nippon Yusen Kabushiki on October 10, 2024 and sell it today you would earn a total of  910.00  from holding Nippon Yusen Kabushiki or generate 40.77% 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.  Nippon Yusen Kabushiki

Perseus Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perseus Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Nippon Yusen Kabushiki

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Yusen Kabushiki are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, Nippon Yusen 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 Nippon Yusen

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

The idea behind Perseus Mining Limited and Nippon Yusen Kabushiki 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.