Correlation Between Perseus Mining and AstraZeneca PLC

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

Diversification Opportunities for Perseus Mining and AstraZeneca PLC

0.58

Correlation Coefficient

Perseus Mining  AstraZeneca PLC

Very weak diversification

The 3 months correlation between Perseus and AstraZeneca is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC 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 AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of Perseus Mining i.e., Perseus Mining and AstraZeneca PLC go up and down completely randomly.

Pair Corralation between Perseus Mining and AstraZeneca PLC

Assuming the 90 days horizon Perseus Mining Limited is expected to under-perform the AstraZeneca PLC. But the stock apears to be less risky and, when comparing its historical volatility, Perseus Mining Limited is 1.02 times less risky than AstraZeneca PLC. The stock trades about -0.07 of its potential returns per unit of risk. The AstraZeneca PLC is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  14,170  in AstraZeneca PLC on October 24, 2024 and sell it today you would lose (1,065) from holding AstraZeneca PLC or give up 7.52% of portfolio value over 90 days.

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

Perseus Mining Limited  vs.  AstraZeneca PLC

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AstraZeneca PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AstraZeneca PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Perseus Mining and AstraZeneca PLC

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

The idea behind Perseus Mining Limited and AstraZeneca PLC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.