Correlation Between Perseus Mining and Ebro Foods

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

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

Diversification Opportunities for Perseus Mining and Ebro Foods

0.45

Correlation Coefficient

Perseus Mining  Ebro Foods

Very weak diversification

The 3 months correlation between Perseus and Ebro is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Ebro Foods SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods SA and Perseus Mining 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 Perseus Mining Limited are associated (or correlated) with Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods SA has no effect on the direction of Perseus Mining i.e., Perseus Mining and Ebro Foods go up and down completely randomly.

Pair Corralation between Perseus Mining and Ebro Foods

Assuming the 90 days horizon Perseus Mining Limited is expected to under-perform the Ebro Foods. In addition to that, Perseus Mining is 2.32 times more volatile than Ebro Foods SA. It trades about -0.04 of its total potential returns per unit of risk. Ebro Foods SA is currently generating about 0.01 per unit of volatility. If you would invest  1,574  in Ebro Foods SA on September 26, 2024 and sell it today you would earn a total of  6.00  from holding Ebro Foods SA or generate 0.38% return on investment over 90 days.

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

Perseus Mining Limited  vs.  Ebro Foods SA

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.

Ebro Foods SA

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Perseus Mining and Ebro Foods

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

The idea behind Perseus Mining Limited and Ebro Foods SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.