Correlation Between Perseus Mining and Hunter Creek

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

Diversification Opportunities for Perseus Mining and Hunter Creek

-0.66

Correlation Coefficient

Perseus Mining  Hunter Creek

Excellent diversification

The 3 months correlation between Perseus and Hunter is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Hunter Creek Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunter Creek Mining 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 Hunter Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunter Creek Mining has no effect on the direction of Perseus Mining i.e., Perseus Mining and Hunter Creek go up and down completely randomly.

Pair Corralation between Perseus Mining and Hunter Creek

Assuming the 90 days horizon Perseus Mining is expected to generate 27.38 times less return on investment than Hunter Creek. But when comparing it to its historical volatility, Perseus Mining Limited is 55.82 times less risky than Hunter Creek. It trades about 0.2 of its potential returns per unit of risk. Hunter Creek Mining is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  9.80  in Hunter Creek Mining on December 21, 2024 and sell it today you would lose (9.80) from holding Hunter Creek Mining or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	91.94%
Values	Daily Returns

Perseus Mining Limited  vs.  Hunter Creek Mining

Perseus Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Perseus Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Hunter Creek Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hunter Creek Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Hunter Creek exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perseus Mining and Hunter Creek

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

The idea behind Perseus Mining Limited and Hunter Creek Mining 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.