Correlation Between Vulcan Materials and Perseus Mining

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

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

Diversification Opportunities for Vulcan Materials and Perseus Mining

-0.5

Correlation Coefficient

Vulcan Materials  Perseus Mining

Very good diversification

The 3 months correlation between Vulcan and Perseus is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Vulcan Materials 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 Vulcan Materials 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 Vulcan Materials i.e., Vulcan Materials and Perseus Mining go up and down completely randomly.

Pair Corralation between Vulcan Materials and Perseus Mining

Considering the 90-day investment horizon Vulcan Materials is expected to under-perform the Perseus Mining. But the stock apears to be less risky and, when comparing its historical volatility, Vulcan Materials is 1.47 times less risky than Perseus Mining. The stock trades about -0.09 of its potential returns per unit of risk. The Perseus Mining Limited is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  159.00  in Perseus Mining Limited on December 19, 2024 and sell it today you would earn a total of  44.00  from holding Perseus Mining Limited or generate 27.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

Vulcan Materials  vs.  Perseus Mining Limited

Vulcan Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vulcan Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Perseus Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Perseus Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vulcan Materials and Perseus Mining

The main advantage of trading using opposite Vulcan Materials and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials 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 Vulcan Materials 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.