Correlation Between Perseus Mining and PLAYTECH

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

Diversification Opportunities for Perseus Mining and PLAYTECH

0.47

Correlation Coefficient

Perseus Mining  PLAYTECH

Very weak diversification

The 3 months correlation between Perseus and PLAYTECH is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and PLAYTECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTECH 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 PLAYTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYTECH has no effect on the direction of Perseus Mining i.e., Perseus Mining and PLAYTECH go up and down completely randomly.

Pair Corralation between Perseus Mining and PLAYTECH

Assuming the 90 days horizon Perseus Mining Limited is expected to generate 1.34 times more return on investment than PLAYTECH. However, Perseus Mining is 1.34 times more volatile than PLAYTECH. It trades about 0.16 of its potential returns per unit of risk. PLAYTECH is currently generating about 0.05 per unit of risk. If you would invest  152.00  in Perseus Mining Limited on December 23, 2024 and sell it today you would earn a total of  31.00  from holding Perseus Mining Limited or generate 20.39% 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.  PLAYTECH

Perseus Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Perseus Mining reported solid returns over the last few months and may actually be approaching a breakup point.

PLAYTECH

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYTECH are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PLAYTECH is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Perseus Mining and PLAYTECH

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

The idea behind Perseus Mining Limited and PLAYTECH 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.