Correlation Between Perseus Mining and Allkem

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

Diversification Opportunities for Perseus Mining and Allkem

-0.07

Correlation Coefficient

Perseus Mining  Allkem

Good diversification

The 3 months correlation between Perseus and Allkem is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Allkem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allkem 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 Allkem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allkem has no effect on the direction of Perseus Mining i.e., Perseus Mining and Allkem go up and down completely randomly.

Pair Corralation between Perseus Mining and Allkem

If you would invest  172.00  in Perseus Mining Limited on September 14, 2024 and sell it today you would earn a total of  8.00  from holding Perseus Mining Limited or generate 4.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Perseus Mining Limited  vs.  Allkem

Perseus Mining

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Perseus Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Allkem

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allkem has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Allkem 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 Allkem

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

The idea behind Perseus Mining Limited and Allkem 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.