Correlation Between Perseus Mining and NLIGHT
Can any of the company-specific risk be diversified away by investing in both Perseus Mining and NLIGHT 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 NLIGHT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perseus Mining Limited and nLIGHT Inc, you can compare the effects of market volatilities on Perseus Mining and NLIGHT 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 NLIGHT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perseus Mining and NLIGHT.
Diversification Opportunities for Perseus Mining and NLIGHT
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Perseus and NLIGHT is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and nLIGHT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nLIGHT Inc 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 Limited are associated (or correlated) with NLIGHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nLIGHT Inc has no effect on the direction of Perseus Mining i.e., Perseus Mining and NLIGHT go up and down completely randomly.
Pair Corralation between Perseus Mining and NLIGHT
Assuming the 90 days horizon Perseus Mining is expected to generate 1.03 times less return on investment than NLIGHT. But when comparing it to its historical volatility, Perseus Mining Limited is 2.09 times less risky than NLIGHT. It trades about 0.28 of its potential returns per unit of risk. nLIGHT Inc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,040 in nLIGHT Inc on November 2, 2024 and sell it today you would earn a total of 98.00 from holding nLIGHT Inc or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perseus Mining Limited vs. nLIGHT Inc
Performance |
| Timeline |
| Perseus Mining |
| nLIGHT Inc |
Perseus Mining and NLIGHT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perseus Mining and NLIGHT
The main advantage of trading using opposite Perseus Mining and NLIGHT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perseus Mining position performs unexpectedly, NLIGHT 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 NLIGHT will offset losses from the drop in NLIGHT's long position.| Perseus Mining vs. Aurion Resources | Perseus Mining vs. Liberty Gold Corp | Perseus Mining vs. Rio2 Limited | Perseus Mining vs. Orezone Gold Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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