Correlation Between Perseus Mining and Supremex

Can any of the company-specific risk be diversified away by investing in both Perseus Mining and Supremex 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 Supremex into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perseus Mining and Supremex, you can compare the effects of market volatilities on Perseus Mining and Supremex 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 Supremex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perseus Mining and Supremex.

Diversification Opportunities for Perseus Mining and Supremex

-0.44

Correlation Coefficient

Perseus Mining  Supremex

Very good diversification

The 3 months correlation between Perseus and Supremex is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining and Supremex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supremex 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 are associated (or correlated) with Supremex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supremex has no effect on the direction of Perseus Mining i.e., Perseus Mining and Supremex go up and down completely randomly.

Pair Corralation between Perseus Mining and Supremex

Assuming the 90 days trading horizon Perseus Mining is expected to generate 2.16 times more return on investment than Supremex. However, Perseus Mining is 2.16 times more volatile than Supremex. It trades about -0.03 of its potential returns per unit of risk. Supremex is currently generating about -0.27 per unit of risk. If you would invest  242.00  in Perseus Mining on September 22, 2024 and sell it today you would lose (5.00) from holding Perseus Mining or give up 2.07% of portfolio value over 90 days.

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

Perseus Mining  vs.  Supremex

Perseus Mining

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Perseus Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Supremex

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Perseus Mining and Supremex

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

The idea behind Perseus Mining and Supremex 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.