Correlation Between Perseus Mining and Critical Metals

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

Diversification Opportunities for Perseus Mining and Critical Metals

-0.05

Correlation Coefficient

Perseus Mining  Critical Metals

Good diversification

The 3 months correlation between Perseus and Critical is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Critical Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Metals 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 Critical Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Metals Corp has no effect on the direction of Perseus Mining i.e., Perseus Mining and Critical Metals go up and down completely randomly.

Pair Corralation between Perseus Mining and Critical Metals

Assuming the 90 days horizon Perseus Mining is expected to generate 1.89 times less return on investment than Critical Metals. But when comparing it to its historical volatility, Perseus Mining Limited is 2.63 times less risky than Critical Metals. It trades about 0.03 of its potential returns per unit of risk. Critical Metals Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,020  in Critical Metals Corp on September 13, 2024 and sell it today you would lose (329.00) from holding Critical Metals Corp or give up 32.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.17%
Values	Daily Returns

Perseus Mining Limited  vs.  Critical Metals Corp

Perseus Mining

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Critical Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Critical Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Critical Metals is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Perseus Mining and Critical Metals

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

The idea behind Perseus Mining Limited and Critical Metals 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.