Correlation Between Perseus Mining and Stelar Metals
Can any of the company-specific risk be diversified away by investing in both Perseus Mining and Stelar Metals 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 Stelar Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perseus Mining and Stelar Metals, you can compare the effects of market volatilities on Perseus Mining and Stelar Metals 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 Stelar Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perseus Mining and Stelar Metals.
Diversification Opportunities for Perseus Mining and Stelar Metals
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Perseus and Stelar is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining and Stelar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelar Metals 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 Stelar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelar Metals has no effect on the direction of Perseus Mining i.e., Perseus Mining and Stelar Metals go up and down completely randomly.
Pair Corralation between Perseus Mining and Stelar Metals
Assuming the 90 days trading horizon Perseus Mining is expected to generate 0.74 times more return on investment than Stelar Metals. However, Perseus Mining is 1.35 times less risky than Stelar Metals. It trades about -0.16 of its potential returns per unit of risk. Stelar Metals is currently generating about -0.22 per unit of risk. If you would invest 284.00 in Perseus Mining on August 27, 2024 and sell it today you would lose (21.00) from holding Perseus Mining or give up 7.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perseus Mining vs. Stelar Metals
Performance |
| Timeline |
| Perseus Mining |
| Stelar Metals |
Perseus Mining and Stelar Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perseus Mining and Stelar Metals
The main advantage of trading using opposite Perseus Mining and Stelar Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perseus Mining position performs unexpectedly, Stelar Metals 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 Stelar Metals will offset losses from the drop in Stelar Metals' long position.| Perseus Mining vs. Northern Star Resources | Perseus Mining vs. Evolution Mining | Perseus Mining vs. Bluescope Steel | Perseus Mining vs. Sandfire Resources NL |
| Stelar Metals vs. Northern Star Resources | Stelar Metals vs. Evolution Mining | Stelar Metals vs. Bluescope Steel | Stelar Metals vs. Sandfire Resources NL |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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