Correlation Between Perseus Mining and Serabi Gold

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

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

Diversification Opportunities for Perseus Mining and Serabi Gold

0.64

Correlation Coefficient

Perseus Mining  Serabi Gold

Poor diversification

The 3 months correlation between Perseus and Serabi is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining and Serabi Gold PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Serabi Gold PLC 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 Serabi Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Serabi Gold PLC has no effect on the direction of Perseus Mining i.e., Perseus Mining and Serabi Gold go up and down completely randomly.

Pair Corralation between Perseus Mining and Serabi Gold

Assuming the 90 days trading horizon Perseus Mining is expected to generate 6.08 times less return on investment than Serabi Gold. But when comparing it to its historical volatility, Perseus Mining is 2.4 times less risky than Serabi Gold. It trades about 0.1 of its potential returns per unit of risk. Serabi Gold PLC is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  178.00  in Serabi Gold PLC on November 29, 2024 and sell it today you would earn a total of  161.00  from holding Serabi Gold PLC or generate 90.45% return on investment over 90 days.

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

Perseus Mining  vs.  Serabi Gold PLC

Perseus Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Perseus Mining may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Serabi Gold PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Serabi Gold PLC are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal forward indicators, Serabi Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perseus Mining and Serabi Gold

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

The idea behind Perseus Mining and Serabi Gold PLC 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.