Correlation Between Ihuman and Perseus Mining

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

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

Diversification Opportunities for Ihuman and Perseus Mining

0.3

Correlation Coefficient

Ihuman  Perseus Mining

Weak diversification

The 3 months correlation between Ihuman and Perseus is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ihuman Inc and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Ihuman 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 Ihuman Inc 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 Ihuman i.e., Ihuman and Perseus Mining go up and down completely randomly.

Pair Corralation between Ihuman and Perseus Mining

Allowing for the 90-day total investment horizon Ihuman Inc is expected to generate 1.41 times more return on investment than Perseus Mining. However, Ihuman is 1.41 times more volatile than Perseus Mining Limited. It trades about 0.05 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about 0.0 per unit of risk. If you would invest  162.00  in Ihuman Inc on September 17, 2024 and sell it today you would earn a total of  14.00  from holding Ihuman Inc or generate 8.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Ihuman Inc  vs.  Perseus Mining Limited

Ihuman Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ihuman Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, Ihuman demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 Ihuman and Perseus Mining

The main advantage of trading using opposite Ihuman and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ihuman 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 Ihuman Inc 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.