Correlation Between Perseus Mining and Emerson Electric

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

Diversification Opportunities for Perseus Mining and Emerson Electric

-0.34

Correlation Coefficient

Perseus Mining  Emerson Electric

Very good diversification

The 3 months correlation between Perseus and Emerson is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Emerson Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric 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 Emerson Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Electric has no effect on the direction of Perseus Mining i.e., Perseus Mining and Emerson Electric go up and down completely randomly.

Pair Corralation between Perseus Mining and Emerson Electric

Assuming the 90 days horizon Perseus Mining is expected to generate 3.67 times less return on investment than Emerson Electric. In addition to that, Perseus Mining is 1.64 times more volatile than Emerson Electric. It trades about 0.04 of its total potential returns per unit of risk. Emerson Electric is currently generating about 0.24 per unit of volatility. If you would invest  10,197  in Emerson Electric on September 14, 2024 and sell it today you would earn a total of  2,919  from holding Emerson Electric or generate 28.63% return on investment over 90 days.

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

Perseus Mining Limited  vs.  Emerson Electric

Perseus Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Perseus Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Emerson Electric

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Emerson Electric are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal primary indicators, Emerson Electric reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perseus Mining and Emerson Electric

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

The idea behind Perseus Mining Limited and Emerson Electric 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.