Correlation Between 40434LAL9 and Perseus Mining

Can any of the company-specific risk be diversified away by investing in both 40434LAL9 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 40434LAL9 and Perseus Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HPQ 42 15 APR 32 and Perseus Mining Limited, you can compare the effects of market volatilities on 40434LAL9 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 40434LAL9 with a short position of Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of 40434LAL9 and Perseus Mining.

Diversification Opportunities for 40434LAL9 and Perseus Mining

0.42

Correlation Coefficient

40434LAL9  Perseus Mining

Very weak diversification

The 3 months correlation between 40434LAL9 and Perseus is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding HPQ 42 15 APR 32 and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and 40434LAL9 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 HPQ 42 15 APR 32 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 40434LAL9 i.e., 40434LAL9 and Perseus Mining go up and down completely randomly.

Pair Corralation between 40434LAL9 and Perseus Mining

Assuming the 90 days trading horizon HPQ 42 15 APR 32 is expected to generate 0.29 times more return on investment than Perseus Mining. However, HPQ 42 15 APR 32 is 3.44 times less risky than Perseus Mining. It trades about -0.18 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about -0.13 per unit of risk. If you would invest  9,558  in HPQ 42 15 APR 32 on October 10, 2024 and sell it today you would lose (258.00) from holding HPQ 42 15 APR 32 or give up 2.7% of portfolio value over 90 days.

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

HPQ 42 15 APR 32  vs.  Perseus Mining Limited

HPQ 42 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HPQ 42 15 APR 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 40434LAL9 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Perseus Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perseus Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Perseus Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with 40434LAL9 and Perseus Mining

The main advantage of trading using opposite 40434LAL9 and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 40434LAL9 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 HPQ 42 15 APR 32 and Perseus Mining Limited 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.