Correlation Between Perseus Mining and Nutrien

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

Diversification Opportunities for Perseus Mining and Nutrien

0.53

Correlation Coefficient

Perseus Mining  Nutrien

Very weak diversification

The 3 months correlation between Perseus and Nutrien is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien 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 Nutrien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutrien has no effect on the direction of Perseus Mining i.e., Perseus Mining and Nutrien go up and down completely randomly.

Pair Corralation between Perseus Mining and Nutrien

Assuming the 90 days horizon Perseus Mining Limited is expected to generate 1.5 times more return on investment than Nutrien. However, Perseus Mining is 1.5 times more volatile than Nutrien. It trades about 0.09 of its potential returns per unit of risk. Nutrien is currently generating about 0.11 per unit of risk. If you would invest  141.00  in Perseus Mining Limited on September 4, 2024 and sell it today you would earn a total of  20.00  from holding Perseus Mining Limited or generate 14.18% return on investment over 90 days.

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

Perseus Mining Limited  vs.  Nutrien

Perseus Mining

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Perseus Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Nutrien

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nutrien are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Nutrien may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Perseus Mining and Nutrien

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

The idea behind Perseus Mining Limited and Nutrien 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.