Correlation Between Perseus Mining and Summa Silver

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

Diversification Opportunities for Perseus Mining and Summa Silver

0.65

Correlation Coefficient

Perseus Mining  Summa Silver

Poor diversification

The 3 months correlation between Perseus and Summa is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Summa Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summa Silver Corp 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 Summa Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summa Silver Corp has no effect on the direction of Perseus Mining i.e., Perseus Mining and Summa Silver go up and down completely randomly.

Pair Corralation between Perseus Mining and Summa Silver

Assuming the 90 days horizon Perseus Mining Limited is expected to under-perform the Summa Silver. But the pink sheet apears to be less risky and, when comparing its historical volatility, Perseus Mining Limited is 1.71 times less risky than Summa Silver. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Summa Silver Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Summa Silver Corp on December 2, 2024 and sell it today you would earn a total of  1.00  from holding Summa Silver Corp or generate 4.55% return on investment over 90 days.

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

Perseus Mining Limited  vs.  Summa Silver Corp

Perseus Mining

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 4 (%) 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 April 2025.

Summa Silver Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Summa Silver Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Summa Silver reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perseus Mining and Summa Silver

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

The idea behind Perseus Mining Limited and Summa Silver Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.