Correlation Between Perseus Mining and ARCHER

Can any of the company-specific risk be diversified away by investing in both Perseus Mining and ARCHER 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 ARCHER 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 ARCHER DANIELS MIDLAND 45, you can compare the effects of market volatilities on Perseus Mining and ARCHER 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 ARCHER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perseus Mining and ARCHER.

Diversification Opportunities for Perseus Mining and ARCHER

0.5

Correlation Coefficient

Perseus Mining  ARCHER

Very weak diversification

The 3 months correlation between Perseus and ARCHER is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and ARCHER DANIELS MIDLAND 45 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARCHER DANIELS MIDLAND 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 ARCHER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARCHER DANIELS MIDLAND has no effect on the direction of Perseus Mining i.e., Perseus Mining and ARCHER go up and down completely randomly.

Pair Corralation between Perseus Mining and ARCHER

Assuming the 90 days horizon Perseus Mining is expected to generate 1.21 times less return on investment than ARCHER. In addition to that, Perseus Mining is 2.42 times more volatile than ARCHER DANIELS MIDLAND 45. It trades about 0.02 of its total potential returns per unit of risk. ARCHER DANIELS MIDLAND 45 is currently generating about 0.07 per unit of volatility. If you would invest  9,069  in ARCHER DANIELS MIDLAND 45 on August 31, 2024 and sell it today you would earn a total of  306.00  from holding ARCHER DANIELS MIDLAND 45 or generate 3.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	58.73%
Values	Daily Returns

Perseus Mining Limited  vs.  ARCHER DANIELS MIDLAND 45

Perseus Mining

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

ARCHER DANIELS MIDLAND

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ARCHER DANIELS MIDLAND 45 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ARCHER 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 ARCHER

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

The idea behind Perseus Mining Limited and ARCHER DANIELS MIDLAND 45 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.