Correlation Between Perseus Mining and Manulife Fin

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

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

Diversification Opportunities for Perseus Mining and Manulife Fin

-0.58

Correlation Coefficient

Perseus Mining  Manulife Fin

Excellent diversification

The 3 months correlation between Perseus and Manulife is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining and Manulife Fin Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Fin Non 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 Manulife Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Fin Non has no effect on the direction of Perseus Mining i.e., Perseus Mining and Manulife Fin go up and down completely randomly.

Pair Corralation between Perseus Mining and Manulife Fin

Assuming the 90 days trading horizon Perseus Mining is expected to generate 3.85 times more return on investment than Manulife Fin. However, Perseus Mining is 3.85 times more volatile than Manulife Fin Non. It trades about 0.22 of its potential returns per unit of risk. Manulife Fin Non is currently generating about -0.01 per unit of risk. If you would invest  227.00  in Perseus Mining on December 25, 2024 and sell it today you would earn a total of  59.00  from holding Perseus Mining or generate 25.99% return on investment over 90 days.

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

Perseus Mining  vs.  Manulife Fin Non

Perseus Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Perseus Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Manulife Fin Non

Risk-Adjusted Performance

Very Weak

Over the last 90 days Manulife Fin Non has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Manulife Fin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Perseus Mining and Manulife Fin

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

The idea behind Perseus Mining and Manulife Fin Non 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.