Correlation Between Perseus Mining and SLR Investment

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

Diversification Opportunities for Perseus Mining and SLR Investment

0.53

Correlation Coefficient

Perseus Mining  SLR Investment

Very weak diversification

The 3 months correlation between Perseus and SLR is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of Perseus Mining i.e., Perseus Mining and SLR Investment go up and down completely randomly.

Pair Corralation between Perseus Mining and SLR Investment

Assuming the 90 days horizon Perseus Mining Limited is expected to generate 1.81 times more return on investment than SLR Investment. However, Perseus Mining is 1.81 times more volatile than SLR Investment Corp. It trades about 0.11 of its potential returns per unit of risk. SLR Investment Corp is currently generating about 0.07 per unit of risk. If you would invest  157.00  in Perseus Mining Limited on December 19, 2024 and sell it today you would earn a total of  22.00  from holding Perseus Mining Limited or generate 14.01% 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.  SLR Investment Corp

Perseus Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 8 (%) 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.

SLR Investment Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SLR Investment 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 SLR Investment

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

The idea behind Perseus Mining Limited and SLR Investment Corp 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.