Correlation Between Perseus Mining and Balkan Mining

Can any of the company-specific risk be diversified away by investing in both Perseus Mining and Balkan Mining 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 Balkan Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perseus Mining and Balkan Mining and, you can compare the effects of market volatilities on Perseus Mining and Balkan Mining 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 Balkan Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perseus Mining and Balkan Mining.

Diversification Opportunities for Perseus Mining and Balkan Mining

0.22

Correlation Coefficient

Perseus Mining  Balkan Mining

Modest diversification

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

Pair Corralation between Perseus Mining and Balkan Mining

Assuming the 90 days trading horizon Perseus Mining is expected to generate 0.25 times more return on investment than Balkan Mining. However, Perseus Mining is 3.94 times less risky than Balkan Mining. It trades about -0.16 of its potential returns per unit of risk. Balkan Mining and is currently generating about -0.07 per unit of risk. If you would invest  274.00  in Perseus Mining on October 7, 2024 and sell it today you would lose (11.00) from holding Perseus Mining or give up 4.01% of portfolio value over 90 days.

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

Perseus Mining  vs.  Balkan Mining and

Perseus Mining

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Perseus Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Balkan Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balkan Mining and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Balkan Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Perseus Mining and Balkan Mining

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

The idea behind Perseus Mining and Balkan Mining and 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.