Correlation Between Perseus Mining and Gentex

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

Diversification Opportunities for Perseus Mining and Gentex

0.22

Correlation Coefficient

Perseus Mining  Gentex

Modest diversification

The 3 months correlation between Perseus and Gentex is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex 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 Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Perseus Mining i.e., Perseus Mining and Gentex go up and down completely randomly.

Pair Corralation between Perseus Mining and Gentex

Assuming the 90 days horizon Perseus Mining Limited is expected to under-perform the Gentex. In addition to that, Perseus Mining is 2.01 times more volatile than Gentex. It trades about -0.05 of its total potential returns per unit of risk. Gentex is currently generating about -0.03 per unit of volatility. If you would invest  3,015  in Gentex on September 25, 2024 and sell it today you would lose (102.00) from holding Gentex or give up 3.38% of portfolio value over 90 days.

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

Perseus Mining Limited  vs.  Gentex

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 latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Gentex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gentex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Gentex is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Perseus Mining and Gentex

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

The idea behind Perseus Mining Limited and Gentex 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.