Correlation Between Perseus Mining and COG Financial

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

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

Diversification Opportunities for Perseus Mining and COG Financial

0.21

Correlation Coefficient

Perseus Mining  COG Financial

Modest diversification

The 3 months correlation between Perseus and COG is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining and COG Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COG Financial Services 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 COG Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COG Financial Services has no effect on the direction of Perseus Mining i.e., Perseus Mining and COG Financial go up and down completely randomly.

Pair Corralation between Perseus Mining and COG Financial

Assuming the 90 days trading horizon Perseus Mining is expected to generate 0.68 times more return on investment than COG Financial. However, Perseus Mining is 1.47 times less risky than COG Financial. It trades about 0.17 of its potential returns per unit of risk. COG Financial Services is currently generating about 0.07 per unit of risk. If you would invest  258.00  in Perseus Mining on December 20, 2024 and sell it today you would earn a total of  54.00  from holding Perseus Mining or generate 20.93% return on investment over 90 days.

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

Perseus Mining  vs.  COG Financial Services

Perseus Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Perseus Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

COG Financial Services

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COG Financial Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, COG Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Perseus Mining and COG Financial

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

The idea behind Perseus Mining and COG Financial Services 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.