Correlation Between Perseus Mining and Analog Devices

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

Diversification Opportunities for Perseus Mining and Analog Devices

0.61

Correlation Coefficient

Perseus Mining  Analog Devices

Poor diversification

The 3 months correlation between Perseus and Analog is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices 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 Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Perseus Mining i.e., Perseus Mining and Analog Devices go up and down completely randomly.

Pair Corralation between Perseus Mining and Analog Devices

Assuming the 90 days horizon Perseus Mining Limited is expected to under-perform the Analog Devices. In addition to that, Perseus Mining is 1.67 times more volatile than Analog Devices. It trades about -0.15 of its total potential returns per unit of risk. Analog Devices is currently generating about 0.0 per unit of volatility. If you would invest  21,625  in Analog Devices on September 28, 2024 and sell it today you would lose (11.00) from holding Analog Devices or give up 0.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Perseus Mining Limited  vs.  Analog Devices

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.

Analog Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Analog Devices has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Analog Devices is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Perseus Mining and Analog Devices

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

The idea behind Perseus Mining Limited and Analog Devices 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.