Correlation Between Perseus Mining and Lachlan Star
Can any of the company-specific risk be diversified away by investing in both Perseus Mining and Lachlan Star 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 Lachlan Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perseus Mining and Lachlan Star, you can compare the effects of market volatilities on Perseus Mining and Lachlan Star 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 Lachlan Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perseus Mining and Lachlan Star.
Diversification Opportunities for Perseus Mining and Lachlan Star
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Perseus and Lachlan is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining and Lachlan Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lachlan Star 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 are associated (or correlated) with Lachlan Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lachlan Star has no effect on the direction of Perseus Mining i.e., Perseus Mining and Lachlan Star go up and down completely randomly.
Pair Corralation between Perseus Mining and Lachlan Star
Assuming the 90 days trading horizon Perseus Mining is expected to generate 1.31 times less return on investment than Lachlan Star. But when comparing it to its historical volatility, Perseus Mining is 2.82 times less risky than Lachlan Star. It trades about 0.08 of its potential returns per unit of risk. Lachlan Star is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Lachlan Star on September 14, 2024 and sell it today you would earn a total of 1.00 from holding Lachlan Star or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Perseus Mining vs. Lachlan Star
Performance |
| Timeline |
| Perseus Mining |
| Lachlan Star |
Perseus Mining and Lachlan Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perseus Mining and Lachlan Star
The main advantage of trading using opposite Perseus Mining and Lachlan Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perseus Mining position performs unexpectedly, Lachlan Star 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 Lachlan Star will offset losses from the drop in Lachlan Star's long position.| Perseus Mining vs. Dug Technology | Perseus Mining vs. Kip McGrath Education | Perseus Mining vs. Regal Funds Management | Perseus Mining vs. Dexus Convenience Retail |
| Lachlan Star vs. Alto Metals | Lachlan Star vs. Perseus Mining | Lachlan Star vs. Aurelia Metals | Lachlan Star vs. G8 Education |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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