Correlation Between BTU Metals and Perseus Mining
Can any of the company-specific risk be diversified away by investing in both BTU Metals and Perseus Mining 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 BTU Metals and Perseus Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTU Metals Corp and Perseus Mining Limited, you can compare the effects of market volatilities on BTU Metals and Perseus Mining 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 BTU Metals with a short position of Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTU Metals and Perseus Mining.
Diversification Opportunities for BTU Metals and Perseus Mining
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BTU and Perseus is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding BTU Metals Corp and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and BTU Metals 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 BTU Metals Corp are associated (or correlated) with Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of BTU Metals i.e., BTU Metals and Perseus Mining go up and down completely randomly.
Pair Corralation between BTU Metals and Perseus Mining
Assuming the 90 days horizon BTU Metals Corp is expected to generate 0.39 times more return on investment than Perseus Mining. However, BTU Metals Corp is 2.54 times less risky than Perseus Mining. It trades about 0.21 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about -0.08 per unit of risk. If you would invest 1.91 in BTU Metals Corp on September 2, 2024 and sell it today you would earn a total of 0.14 from holding BTU Metals Corp or generate 7.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
BTU Metals Corp vs. Perseus Mining Limited
Performance |
| Timeline |
| BTU Metals Corp |
| Perseus Mining |
BTU Metals and Perseus Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTU Metals and Perseus Mining
The main advantage of trading using opposite BTU Metals and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTU Metals position performs unexpectedly, Perseus Mining 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 Perseus Mining will offset losses from the drop in Perseus Mining's long position.| BTU Metals vs. Aurion Resources | BTU Metals vs. Rio2 Limited | BTU Metals vs. Palamina Corp | BTU Metals vs. Grande Portage Resources |
| Perseus Mining vs. Aurion Resources | Perseus Mining vs. Rio2 Limited | Perseus Mining vs. Palamina Corp | Perseus Mining vs. Grande Portage Resources |
Check out your portfolio center.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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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