Correlation Between Mill City and Persimmon Plc

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

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

Diversification Opportunities for Mill City and Persimmon Plc

0.56

Correlation Coefficient

Mill City  Persimmon Plc

Very weak diversification

The 3 months correlation between Mill and Persimmon is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and Persimmon Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Persimmon Plc and Mill City 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 Mill City Ventures are associated (or correlated) with Persimmon Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Persimmon Plc has no effect on the direction of Mill City i.e., Mill City and Persimmon Plc go up and down completely randomly.

Pair Corralation between Mill City and Persimmon Plc

Given the investment horizon of 90 days Mill City Ventures is expected to under-perform the Persimmon Plc. In addition to that, Mill City is 2.04 times more volatile than Persimmon Plc. It trades about -0.18 of its total potential returns per unit of risk. Persimmon Plc is currently generating about -0.21 per unit of volatility. If you would invest  4,313  in Persimmon Plc on September 16, 2024 and sell it today you would lose (1,136) from holding Persimmon Plc or give up 26.34% of portfolio value over 90 days.

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

Mill City Ventures  vs.  Persimmon Plc

Mill City Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mill City Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Persimmon Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Persimmon Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mill City and Persimmon Plc

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

The idea behind Mill City Ventures and Persimmon Plc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..