Correlation Between Northern Star and Perseus Mining
Can any of the company-specific risk be diversified away by investing in both Northern Star 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 Northern Star and Perseus Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Star Resources and Perseus Mining, you can compare the effects of market volatilities on Northern Star 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 Northern Star with a short position of Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and Perseus Mining.
Diversification Opportunities for Northern Star and Perseus Mining
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and Perseus is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and Perseus Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Northern Star 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 Northern Star Resources 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 Northern Star i.e., Northern Star and Perseus Mining go up and down completely randomly.
Pair Corralation between Northern Star and Perseus Mining
Assuming the 90 days trading horizon Northern Star Resources is expected to generate 0.84 times more return on investment than Perseus Mining. However, Northern Star Resources is 1.19 times less risky than Perseus Mining. It trades about 0.06 of its potential returns per unit of risk. Perseus Mining is currently generating about 0.03 per unit of risk. If you would invest 1,038 in Northern Star Resources on August 24, 2024 and sell it today you would earn a total of 752.00 from holding Northern Star Resources or generate 72.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Star Resources vs. Perseus Mining
Performance |
| Timeline |
| Northern Star Resources |
| Perseus Mining |
Northern Star and Perseus Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and Perseus Mining
The main advantage of trading using opposite Northern Star and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star 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.| Northern Star vs. RLF AgTech | Northern Star vs. Thorney Technologies | Northern Star vs. Zoom2u Technologies | Northern Star vs. Richmond Vanadium Technology |
| Perseus Mining vs. Northern Star Resources | Perseus Mining vs. Evolution Mining | Perseus Mining vs. Bluescope Steel | Perseus Mining vs. Aneka Tambang Tbk |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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