Correlation Between Perseus Mining and EIDESVIK OFFSHORE

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

Diversification Opportunities for Perseus Mining and EIDESVIK OFFSHORE

0.87

Correlation Coefficient

Perseus Mining  EIDESVIK OFFSHORE

Very poor diversification

The 3 months correlation between Perseus and EIDESVIK is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and EIDESVIK OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EIDESVIK OFFSHORE has no effect on the direction of Perseus Mining i.e., Perseus Mining and EIDESVIK OFFSHORE go up and down completely randomly.

Pair Corralation between Perseus Mining and EIDESVIK OFFSHORE

Assuming the 90 days horizon Perseus Mining is expected to generate 1.11 times less return on investment than EIDESVIK OFFSHORE. But when comparing it to its historical volatility, Perseus Mining Limited is 1.05 times less risky than EIDESVIK OFFSHORE. It trades about 0.03 of its potential returns per unit of risk. EIDESVIK OFFSHORE NK is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  107.00  in EIDESVIK OFFSHORE NK on February 24, 2024 and sell it today you would earn a total of  29.00  from holding EIDESVIK OFFSHORE NK or generate 27.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Perseus Mining Limited  vs.  EIDESVIK OFFSHORE NK

Perseus Mining

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 17 (%) 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.

EIDESVIK OFFSHORE

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EIDESVIK OFFSHORE NK are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, EIDESVIK OFFSHORE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perseus Mining and EIDESVIK OFFSHORE

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

The idea behind Perseus Mining Limited and EIDESVIK OFFSHORE NK 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.