Correlation Between Perseus Mining and JBDI Holdings

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

Diversification Opportunities for Perseus Mining and JBDI Holdings

0.67

Correlation Coefficient

Perseus Mining  JBDI Holdings

Poor diversification

The 3 months correlation between Perseus and JBDI is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and JBDI Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBDI Holdings Limited 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 JBDI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBDI Holdings Limited has no effect on the direction of Perseus Mining i.e., Perseus Mining and JBDI Holdings go up and down completely randomly.

Pair Corralation between Perseus Mining and JBDI Holdings

Assuming the 90 days horizon Perseus Mining Limited is expected to generate 0.23 times more return on investment than JBDI Holdings. However, Perseus Mining Limited is 4.41 times less risky than JBDI Holdings. It trades about 0.03 of its potential returns per unit of risk. JBDI Holdings Limited is currently generating about -0.06 per unit of risk. If you would invest  151.00  in Perseus Mining Limited on September 30, 2024 and sell it today you would earn a total of  6.00  from holding Perseus Mining Limited or generate 3.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	69.05%
Values	Daily Returns

Perseus Mining Limited  vs.  JBDI Holdings Limited

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.

JBDI Holdings Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JBDI Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Perseus Mining and JBDI Holdings

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

The idea behind Perseus Mining Limited and JBDI Holdings Limited 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.