Correlation Between Perseus Mining and 35137LAJ4

Can any of the company-specific risk be diversified away by investing in both Perseus Mining and 35137LAJ4 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 35137LAJ4 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 FOX P, you can compare the effects of market volatilities on Perseus Mining and 35137LAJ4 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 35137LAJ4. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perseus Mining and 35137LAJ4.

Diversification Opportunities for Perseus Mining and 35137LAJ4

0.27

Correlation Coefficient

Perseus Mining  35137LAJ4

Modest diversification

The 3 months correlation between Perseus and 35137LAJ4 is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and FOX P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 35137LAJ4 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 35137LAJ4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 35137LAJ4 has no effect on the direction of Perseus Mining i.e., Perseus Mining and 35137LAJ4 go up and down completely randomly.

Pair Corralation between Perseus Mining and 35137LAJ4

Assuming the 90 days horizon Perseus Mining is expected to generate 52.83 times less return on investment than 35137LAJ4. But when comparing it to its historical volatility, Perseus Mining Limited is 20.49 times less risky than 35137LAJ4. It trades about 0.02 of its potential returns per unit of risk. FOX P is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,290  in FOX P on September 26, 2024 and sell it today you would lose (24.00) from holding FOX P or give up 0.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.18%
Values	Daily Returns

Perseus Mining Limited  vs.  FOX P

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.

35137LAJ4

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FOX P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for FOX P investors.

Pair Trading with Perseus Mining and 35137LAJ4

The main advantage of trading using opposite Perseus Mining and 35137LAJ4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perseus Mining position performs unexpectedly, 35137LAJ4 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 35137LAJ4 will offset losses from the drop in 35137LAJ4's long position.

The idea behind Perseus Mining Limited and FOX P 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.