Correlation Between Fortescue Metals and Perseus Mining

Can any of the company-specific risk be diversified away by investing in both Fortescue Metals 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 Fortescue Metals and Perseus Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fortescue Metals Group and Perseus Mining Limited, you can compare the effects of market volatilities on Fortescue Metals 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 Fortescue Metals with a short position of Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and Perseus Mining.

Diversification Opportunities for Fortescue Metals and Perseus Mining

-0.36

Correlation Coefficient

Fortescue Metals  Perseus Mining

Very good diversification

The 3 months correlation between Fortescue and Perseus is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Fortescue Metals 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 Fortescue Metals Group 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 Fortescue Metals i.e., Fortescue Metals and Perseus Mining go up and down completely randomly.

Pair Corralation between Fortescue Metals and Perseus Mining

Assuming the 90 days horizon Fortescue Metals Group is expected to generate 0.68 times more return on investment than Perseus Mining. However, Fortescue Metals Group is 1.46 times less risky than Perseus Mining. It trades about 0.07 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about -0.03 per unit of risk. If you would invest  916.00  in Fortescue Metals Group on May 6, 2025 and sell it today you would earn a total of  76.00  from holding Fortescue Metals Group or generate 8.3% return on investment over 90 days.

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

Fortescue Metals Group  vs.  Perseus Mining Limited

Fortescue Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fortescue Metals Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Fortescue Metals may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Perseus Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perseus Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Perseus Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fortescue Metals and Perseus Mining

The main advantage of trading using opposite Fortescue Metals and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals 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.

The idea behind Fortescue Metals Group and Perseus Mining Limited 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.