Correlation Between Perseus Mining and Valeura Energy

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

Diversification Opportunities for Perseus Mining and Valeura Energy

-0.21

Correlation Coefficient

Perseus Mining  Valeura Energy

Very good diversification

The 3 months correlation between Perseus and Valeura is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura Energy 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 Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of Perseus Mining i.e., Perseus Mining and Valeura Energy go up and down completely randomly.

Pair Corralation between Perseus Mining and Valeura Energy

Assuming the 90 days horizon Perseus Mining Limited is expected to under-perform the Valeura Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Perseus Mining Limited is 1.12 times less risky than Valeura Energy. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Valeura Energy is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  320.00  in Valeura Energy on September 1, 2024 and sell it today you would earn a total of  67.00  from holding Valeura Energy or generate 20.94% return on investment over 90 days.

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

Perseus Mining Limited  vs.  Valeura Energy

Perseus Mining

Risk-Adjusted Performance

1 of 100

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.

Valeura Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Valeura Energy may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Perseus Mining and Valeura Energy

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

The idea behind Perseus Mining Limited and Valeura Energy 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.