Correlation Between Insteel Industries and Perseus Mining
Can any of the company-specific risk be diversified away by investing in both Insteel Industries 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 Insteel Industries and Perseus Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Perseus Mining Limited, you can compare the effects of market volatilities on Insteel Industries 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 Insteel Industries with a short position of Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Perseus Mining.
Diversification Opportunities for Insteel Industries and Perseus Mining
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Insteel and Perseus is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Insteel Industries 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 Insteel Industries 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 Insteel Industries i.e., Insteel Industries and Perseus Mining go up and down completely randomly.
Pair Corralation between Insteel Industries and Perseus Mining
Assuming the 90 days horizon Insteel Industries is expected to generate 1.25 times more return on investment than Perseus Mining. However, Insteel Industries is 1.25 times more volatile than Perseus Mining Limited. It trades about 0.23 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about -0.18 per unit of risk. If you would invest 2,540 in Insteel Industries on August 29, 2024 and sell it today you would earn a total of 340.00 from holding Insteel Industries or generate 13.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insteel Industries vs. Perseus Mining Limited
Performance |
| Timeline |
| Insteel Industries |
| Perseus Mining |
Insteel Industries and Perseus Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Perseus Mining
The main advantage of trading using opposite Insteel Industries and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries 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.| Insteel Industries vs. FAST RETAIL ADR | Insteel Industries vs. COSTCO WHOLESALE CDR | Insteel Industries vs. MARKET VECTR RETAIL | Insteel Industries vs. Costco Wholesale Corp |
| Perseus Mining vs. Corporate Travel Management | Perseus Mining vs. ADRIATIC METALS LS 013355 | Perseus Mining vs. SCIENCE IN SPORT | Perseus Mining vs. NTG Nordic Transport |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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