Correlation Between Perseus Mining and M3 Brigade

Can any of the company-specific risk be diversified away by investing in both Perseus Mining and M3 Brigade 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 M3 Brigade 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 M3 Brigade Acquisition V, you can compare the effects of market volatilities on Perseus Mining and M3 Brigade 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 M3 Brigade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perseus Mining and M3 Brigade.

Diversification Opportunities for Perseus Mining and M3 Brigade

0.81

Correlation Coefficient

Perseus Mining  M3 Brigade

Very poor diversification

The 3 months correlation between Perseus and MBAV is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and M3 Brigade Acquisition V in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M3 Brigade Acquisition 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 M3 Brigade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M3 Brigade Acquisition has no effect on the direction of Perseus Mining i.e., Perseus Mining and M3 Brigade go up and down completely randomly.

Pair Corralation between Perseus Mining and M3 Brigade

Assuming the 90 days horizon Perseus Mining Limited is expected to generate 27.9 times more return on investment than M3 Brigade. However, Perseus Mining is 27.9 times more volatile than M3 Brigade Acquisition V. It trades about 0.19 of its potential returns per unit of risk. M3 Brigade Acquisition V is currently generating about 0.27 per unit of risk. If you would invest  159.00  in Perseus Mining Limited on December 19, 2024 and sell it today you would earn a total of  44.00  from holding Perseus Mining Limited or generate 27.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

Perseus Mining Limited  vs.  M3 Brigade Acquisition V

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 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Perseus Mining reported solid returns over the last few months and may actually be approaching a breakup point.

M3 Brigade Acquisition

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in M3 Brigade Acquisition V are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, M3 Brigade is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Perseus Mining and M3 Brigade

The main advantage of trading using opposite Perseus Mining and M3 Brigade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perseus Mining position performs unexpectedly, M3 Brigade 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 M3 Brigade will offset losses from the drop in M3 Brigade's long position.

The idea behind Perseus Mining Limited and M3 Brigade Acquisition V 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.