Correlation Between South32 and Perseus Mining
Can any of the company-specific risk be diversified away by investing in both South32 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 South32 and Perseus Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South32 and Perseus Mining, you can compare the effects of market volatilities on South32 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 South32 with a short position of Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of South32 and Perseus Mining.
Diversification Opportunities for South32 and Perseus Mining
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between South32 and Perseus is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding South32 and Perseus Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and South32 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 South32 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 South32 i.e., South32 and Perseus Mining go up and down completely randomly.
Pair Corralation between South32 and Perseus Mining
Assuming the 90 days trading horizon South32 is expected to generate 0.94 times more return on investment than Perseus Mining. However, South32 is 1.07 times less risky than Perseus Mining. It trades about -0.05 of its potential returns per unit of risk. Perseus Mining is currently generating about -0.15 per unit of risk. If you would invest 373.00 in South32 on September 5, 2024 and sell it today you would lose (11.00) from holding South32 or give up 2.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
South32 vs. Perseus Mining
Performance |
| Timeline |
| South32 |
| Perseus Mining |
South32 and Perseus Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South32 and Perseus Mining
The main advantage of trading using opposite South32 and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South32 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.| South32 vs. Perseus Mining | South32 vs. Aurelia Metals | South32 vs. DMC Mining | South32 vs. Kingsrose Mining |
| Perseus Mining vs. Northern Star Resources | Perseus Mining vs. Sandfire Resources NL | 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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