Correlation Between HPQ Silicon and Perseus Mining

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

Diversification Opportunities for HPQ Silicon and Perseus Mining

-0.13

Correlation Coefficient

HPQ Silicon  Perseus Mining

Good diversification

The 3 months correlation between HPQ and Perseus is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding HPQ Silicon Resources and Perseus Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and HPQ Silicon 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 Silicon Resources 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 HPQ Silicon i.e., HPQ Silicon and Perseus Mining go up and down completely randomly.

Pair Corralation between HPQ Silicon and Perseus Mining

Assuming the 90 days horizon HPQ Silicon Resources is expected to under-perform the Perseus Mining. In addition to that, HPQ Silicon is 1.44 times more volatile than Perseus Mining. It trades about -0.19 of its total potential returns per unit of risk. Perseus Mining is currently generating about 0.06 per unit of volatility. If you would invest  219.00  in Perseus Mining on September 4, 2024 and sell it today you would earn a total of  17.00  from holding Perseus Mining or generate 7.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

HPQ Silicon Resources  vs.  Perseus Mining

HPQ Silicon Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HPQ Silicon Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Perseus Mining

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining are ranked lower than 4 (%) 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 January 2025.

Pair Trading with HPQ Silicon and Perseus Mining

The main advantage of trading using opposite HPQ Silicon and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HPQ Silicon 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 Silicon Resources 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.