Correlation Between Perseus Mining and Arhaus

Can any of the company-specific risk be diversified away by investing in both Perseus Mining and Arhaus 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 Arhaus 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 Arhaus Inc, you can compare the effects of market volatilities on Perseus Mining and Arhaus 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 Arhaus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perseus Mining and Arhaus.

Diversification Opportunities for Perseus Mining and Arhaus

0.54

Correlation Coefficient

Perseus Mining  Arhaus

Very weak diversification

The 3 months correlation between Perseus and Arhaus is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus 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 Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of Perseus Mining i.e., Perseus Mining and Arhaus go up and down completely randomly.

Pair Corralation between Perseus Mining and Arhaus

Assuming the 90 days horizon Perseus Mining is expected to generate 3.88 times less return on investment than Arhaus. In addition to that, Perseus Mining is 1.09 times more volatile than Arhaus Inc. It trades about 0.12 of its total potential returns per unit of risk. Arhaus Inc is currently generating about 0.49 per unit of volatility. If you would invest  1,550  in Arhaus Inc on March 10, 2024 and sell it today you would earn a total of  418.00  from holding Arhaus Inc or generate 26.97% 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.  Arhaus Inc

Perseus Mining

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Perseus Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Arhaus Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arhaus Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, Arhaus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perseus Mining and Arhaus

The main advantage of trading using opposite Perseus Mining and Arhaus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perseus Mining position performs unexpectedly, Arhaus 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 Arhaus will offset losses from the drop in Arhaus' long position.

The idea behind Perseus Mining Limited and Arhaus Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.