Correlation Between Perseus Mining and Level

Can any of the company-specific risk be diversified away by investing in both Perseus Mining and Level 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 Level 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 Level 3 Financing, you can compare the effects of market volatilities on Perseus Mining and Level 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 Level. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perseus Mining and Level.

Diversification Opportunities for Perseus Mining and Level

-0.22

Correlation Coefficient

Perseus Mining  Level

Very good diversification

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

Pair Corralation between Perseus Mining and Level

Assuming the 90 days horizon Perseus Mining Limited is expected to under-perform the Level. But the pink sheet apears to be less risky and, when comparing its historical volatility, Perseus Mining Limited is 11.5 times less risky than Level. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Level 3 Financing is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  9,400  in Level 3 Financing on October 11, 2024 and sell it today you would lose (904.00) from holding Level 3 Financing or give up 9.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	19.05%
Values	Daily Returns

Perseus Mining Limited  vs.  Level 3 Financing

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.

Level 3 Financing

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Level 3 Financing are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Level sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perseus Mining and Level

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

The idea behind Perseus Mining Limited and Level 3 Financing 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.