Correlation Between Perseus Mining and Caravel Minerals

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

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

Diversification Opportunities for Perseus Mining and Caravel Minerals

-0.27

Correlation Coefficient

Perseus Mining  Caravel Minerals

Very good diversification

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

Pair Corralation between Perseus Mining and Caravel Minerals

Assuming the 90 days trading horizon Perseus Mining is expected to under-perform the Caravel Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Perseus Mining is 1.9 times less risky than Caravel Minerals. The stock trades about -0.01 of its potential returns per unit of risk. The Caravel Minerals is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Caravel Minerals on October 26, 2024 and sell it today you would earn a total of  5.00  from holding Caravel Minerals or generate 33.33% return on investment over 90 days.

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

Perseus Mining  vs.  Caravel Minerals

Perseus Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perseus Mining has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Caravel Minerals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Caravel Minerals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Caravel Minerals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perseus Mining and Caravel Minerals

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

The idea behind Perseus Mining and Caravel Minerals 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 CEOs Directory module to screen CEOs from public companies around the world.