Correlation Between Perseus Mining and Woolworths
Can any of the company-specific risk be diversified away by investing in both Perseus Mining and Woolworths 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 Woolworths into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perseus Mining and Woolworths, you can compare the effects of market volatilities on Perseus Mining and Woolworths 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 Woolworths. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perseus Mining and Woolworths.
Diversification Opportunities for Perseus Mining and Woolworths
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Perseus and Woolworths is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining and Woolworths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths 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 Woolworths. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths has no effect on the direction of Perseus Mining i.e., Perseus Mining and Woolworths go up and down completely randomly.
Pair Corralation between Perseus Mining and Woolworths
Assuming the 90 days trading horizon Perseus Mining is expected to generate 2.62 times more return on investment than Woolworths. However, Perseus Mining is 2.62 times more volatile than Woolworths. It trades about 0.08 of its potential returns per unit of risk. Woolworths is currently generating about -0.03 per unit of risk. If you would invest 264.00 in Perseus Mining on October 30, 2024 and sell it today you would earn a total of 14.00 from holding Perseus Mining or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perseus Mining vs. Woolworths
Performance |
| Timeline |
| Perseus Mining |
| Woolworths |
Perseus Mining and Woolworths Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perseus Mining and Woolworths
The main advantage of trading using opposite Perseus Mining and Woolworths positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perseus Mining position performs unexpectedly, Woolworths 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 Woolworths will offset losses from the drop in Woolworths' long position.| Perseus Mining vs. Charter Hall Retail | Perseus Mining vs. Carlton Investments | Perseus Mining vs. MFF Capital Investments | Perseus Mining vs. Super Retail Group |
| Woolworths vs. TPG Telecom | Woolworths vs. Hotel Property Investments | Woolworths vs. Hutchison Telecommunications | Woolworths vs. Viva Leisure |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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