Correlation Between Perseus Mining and WILLIS LEASE

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

Diversification Opportunities for Perseus Mining and WILLIS LEASE

0.57

Correlation Coefficient

Perseus Mining  WILLIS LEASE

Very weak diversification

The 3 months correlation between Perseus and WILLIS is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and WILLIS LEASE FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WILLIS LEASE FIN 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 WILLIS LEASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WILLIS LEASE FIN has no effect on the direction of Perseus Mining i.e., Perseus Mining and WILLIS LEASE go up and down completely randomly.

Pair Corralation between Perseus Mining and WILLIS LEASE

Assuming the 90 days horizon Perseus Mining is expected to generate 6.89 times less return on investment than WILLIS LEASE. But when comparing it to its historical volatility, Perseus Mining Limited is 1.68 times less risky than WILLIS LEASE. It trades about 0.06 of its potential returns per unit of risk. WILLIS LEASE FIN is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  6,025  in WILLIS LEASE FIN on September 2, 2024 and sell it today you would earn a total of  13,575  from holding WILLIS LEASE FIN or generate 225.31% 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.  WILLIS LEASE FIN

Perseus Mining

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 4 (%) 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.

WILLIS LEASE FIN

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WILLIS LEASE FIN are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WILLIS LEASE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perseus Mining and WILLIS LEASE

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

The idea behind Perseus Mining Limited and WILLIS LEASE FIN 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.