Correlation Between Perseus Mining and Signal Gold

Can any of the company-specific risk be diversified away by investing in both Perseus Mining and Signal 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 Signal 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 Signal Gold, you can compare the effects of market volatilities on Perseus Mining and Signal 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 Signal Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perseus Mining and Signal Gold.

Diversification Opportunities for Perseus Mining and Signal Gold

0.26

Correlation Coefficient

Perseus Mining  Signal Gold

Modest diversification

The 3 months correlation between Perseus and Signal is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining and Signal Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signal Gold 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 Signal Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signal Gold has no effect on the direction of Perseus Mining i.e., Perseus Mining and Signal Gold go up and down completely randomly.

Pair Corralation between Perseus Mining and Signal Gold

Assuming the 90 days trading horizon Perseus Mining is expected to generate 0.47 times more return on investment than Signal Gold. However, Perseus Mining is 2.13 times less risky than Signal Gold. It trades about 0.07 of its potential returns per unit of risk. Signal Gold is currently generating about -0.03 per unit of risk. If you would invest  223.00  in Perseus Mining on September 3, 2024 and sell it today you would earn a total of  19.00  from holding Perseus Mining or generate 8.52% 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.  Signal Gold

Perseus Mining

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Perseus Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Signal Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Signal Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Perseus Mining and Signal Gold

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

The idea behind Perseus Mining and Signal Gold 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..