Correlation Between Perseus Mining and Albemarle

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

Diversification Opportunities for Perseus Mining and Albemarle

0.13

Correlation Coefficient

Perseus Mining  Albemarle

Average diversification

The 3 months correlation between Perseus and Albemarle is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle 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 Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of Perseus Mining i.e., Perseus Mining and Albemarle go up and down completely randomly.

Pair Corralation between Perseus Mining and Albemarle

Assuming the 90 days horizon Perseus Mining Limited is expected to generate 1.47 times more return on investment than Albemarle. However, Perseus Mining is 1.47 times more volatile than Albemarle. It trades about -0.13 of its potential returns per unit of risk. Albemarle is currently generating about -0.36 per unit of risk. If you would invest  174.00  in Perseus Mining Limited on October 11, 2024 and sell it today you would lose (12.00) from holding Perseus Mining Limited or give up 6.9% of portfolio value over 90 days.

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

Perseus Mining Limited  vs.  Albemarle

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 weak 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.

Albemarle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Albemarle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Perseus Mining and Albemarle

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

The idea behind Perseus Mining Limited and Albemarle 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.