Correlation Between Perseus Mining and Cheniere Energy

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

Diversification Opportunities for Perseus Mining and Cheniere Energy

0.72

Correlation Coefficient

Perseus Mining  Cheniere Energy

Poor diversification

The 3 months correlation between Perseus and Cheniere is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining Limited and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners 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 Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of Perseus Mining i.e., Perseus Mining and Cheniere Energy go up and down completely randomly.

Pair Corralation between Perseus Mining and Cheniere Energy

Assuming the 90 days horizon Perseus Mining Limited is expected to generate 0.93 times more return on investment than Cheniere Energy. However, Perseus Mining Limited is 1.07 times less risky than Cheniere Energy. It trades about 0.09 of its potential returns per unit of risk. Cheniere Energy Partners is currently generating about 0.01 per unit of risk. If you would invest  160.00  in Perseus Mining Limited on January 8, 2025 and sell it today you would earn a total of  22.00  from holding Perseus Mining Limited or generate 13.75% return on investment over 90 days.

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

Perseus Mining Limited  vs.  Cheniere Energy Partners

Perseus Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Perseus Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Cheniere Energy Partners

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy Partners are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Cheniere Energy is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Perseus Mining and Cheniere Energy

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

The idea behind Perseus Mining Limited and Cheniere Energy Partners 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.