Correlation Between Perseus Mining and Pekin Life

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

Diversification Opportunities for Perseus Mining and Pekin Life

-0.4

Correlation Coefficient

Perseus Mining  Pekin Life

Very good diversification

The 3 months correlation between Perseus and Pekin is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Pekin Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pekin Life Insurance 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 Pekin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pekin Life Insurance has no effect on the direction of Perseus Mining i.e., Perseus Mining and Pekin Life go up and down completely randomly.

Pair Corralation between Perseus Mining and Pekin Life

Assuming the 90 days horizon Perseus Mining Limited is expected to generate 1.27 times more return on investment than Pekin Life. However, Perseus Mining is 1.27 times more volatile than Pekin Life Insurance. It trades about 0.04 of its potential returns per unit of risk. Pekin Life Insurance is currently generating about 0.0 per unit of risk. If you would invest  132.00  in Perseus Mining Limited on February 13, 2024 and sell it today you would earn a total of  24.00  from holding Perseus Mining Limited or generate 18.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Perseus Mining Limited  vs.  Pekin Life Insurance

Perseus Mining

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 20 (%) 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.

Pekin Life Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pekin Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Pekin Life is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Perseus Mining and Pekin Life

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

The idea behind Perseus Mining Limited and Pekin Life Insurance 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.