Correlation Between BRF SA and Perseus Mining

Can any of the company-specific risk be diversified away by investing in both BRF SA and Perseus Mining 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 BRF SA and Perseus Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BRF SA and Perseus Mining Limited, you can compare the effects of market volatilities on BRF SA and Perseus Mining 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 BRF SA with a short position of Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRF SA and Perseus Mining.

Diversification Opportunities for BRF SA and Perseus Mining

0.06

Correlation Coefficient

BRF SA  Perseus Mining

Significant diversification

The 3 months correlation between BRF and Perseus is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding BRF SA and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and BRF SA 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 BRF SA are associated (or correlated) with Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of BRF SA i.e., BRF SA and Perseus Mining go up and down completely randomly.

Pair Corralation between BRF SA and Perseus Mining

Assuming the 90 days horizon BRF SA is expected to under-perform the Perseus Mining. In addition to that, BRF SA is 1.6 times more volatile than Perseus Mining Limited. It trades about -0.25 of its total potential returns per unit of risk. Perseus Mining Limited is currently generating about -0.31 per unit of volatility. If you would invest  170.00  in Perseus Mining Limited on October 9, 2024 and sell it today you would lose (15.00) from holding Perseus Mining Limited or give up 8.82% of portfolio value over 90 days.

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

BRF SA  vs.  Perseus Mining Limited

BRF SA

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BRF SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BRF SA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Perseus Mining

Risk-Adjusted Performance

0 of 100

Insignificant

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.

Pair Trading with BRF SA and Perseus Mining

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

The idea behind BRF SA and Perseus Mining Limited 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.