Correlation Between Sims and Perseus Mining

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

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

Diversification Opportunities for Sims and Perseus Mining

0.68

Correlation Coefficient

Sims  Perseus Mining

Poor diversification

The 3 months correlation between Sims and Perseus is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sims and Perseus Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Sims 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 Sims are associated (or correlated) with Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of Sims i.e., Sims and Perseus Mining go up and down completely randomly.

Pair Corralation between Sims and Perseus Mining

Assuming the 90 days trading horizon Sims is expected to generate 0.91 times more return on investment than Perseus Mining. However, Sims is 1.1 times less risky than Perseus Mining. It trades about 0.23 of its potential returns per unit of risk. Perseus Mining is currently generating about 0.21 per unit of risk. If you would invest  1,189  in Sims on December 27, 2024 and sell it today you would earn a total of  324.00  from holding Sims or generate 27.25% return on investment over 90 days.

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

Sims  vs.  Perseus Mining

Sims

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sims are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Sims unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 comparatively uncertain basic indicators, Perseus Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sims and Perseus Mining

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

The idea behind Sims and Perseus Mining 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.