Correlation Between Perseus Mining and Marfrig Global

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

Diversification Opportunities for Perseus Mining and Marfrig Global

-0.22

Correlation Coefficient

Perseus Mining  Marfrig Global

Very good diversification

The 3 months correlation between Perseus and Marfrig is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods 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 Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of Perseus Mining i.e., Perseus Mining and Marfrig Global go up and down completely randomly.

Pair Corralation between Perseus Mining and Marfrig Global

Assuming the 90 days horizon Perseus Mining is expected to generate 1.33 times less return on investment than Marfrig Global. But when comparing it to its historical volatility, Perseus Mining Limited is 2.7 times less risky than Marfrig Global. It trades about 0.2 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  269.00  in Marfrig Global Foods on December 21, 2024 and sell it today you would earn a total of  81.00  from holding Marfrig Global Foods or generate 30.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.61%
Values	Daily Returns

Perseus Mining Limited  vs.  Marfrig Global Foods

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.

Marfrig Global Foods

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Marfrig Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perseus Mining and Marfrig Global

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

The idea behind Perseus Mining Limited and Marfrig Global Foods 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.