Correlation Between HSBC Holdings and Perseus Mining
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings 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 HSBC Holdings and Perseus Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC Holdings plc and Perseus Mining Limited, you can compare the effects of market volatilities on HSBC Holdings 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 HSBC Holdings with a short position of Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Perseus Mining.
Diversification Opportunities for HSBC Holdings and Perseus Mining
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HSBC and Perseus is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and HSBC Holdings 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 HSBC Holdings plc 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 HSBC Holdings i.e., HSBC Holdings and Perseus Mining go up and down completely randomly.
Pair Corralation between HSBC Holdings and Perseus Mining
Assuming the 90 days trading horizon HSBC Holdings is expected to generate 2.06 times less return on investment than Perseus Mining. But when comparing it to its historical volatility, HSBC Holdings plc is 1.45 times less risky than Perseus Mining. It trades about 0.23 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 152.00 in Perseus Mining Limited on October 26, 2024 and sell it today you would earn a total of 15.00 from holding Perseus Mining Limited or generate 9.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings plc vs. Perseus Mining Limited
Performance |
| Timeline |
| HSBC Holdings plc |
| Perseus Mining |
HSBC Holdings and Perseus Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Perseus Mining
The main advantage of trading using opposite HSBC Holdings and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings 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.| HSBC Holdings vs. Perseus Mining Limited | HSBC Holdings vs. BE Semiconductor Industries | HSBC Holdings vs. Magnachip Semiconductor | HSBC Holdings vs. ARDAGH METAL PACDL 0001 |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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