Correlation Between Deep Yellow and Perpetual Credit

Can any of the company-specific risk be diversified away by investing in both Deep Yellow and Perpetual Credit 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 Deep Yellow and Perpetual Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Deep Yellow and Perpetual Credit Income, you can compare the effects of market volatilities on Deep Yellow and Perpetual Credit 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 Deep Yellow with a short position of Perpetual Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deep Yellow and Perpetual Credit.

Diversification Opportunities for Deep Yellow and Perpetual Credit

0.28

Correlation Coefficient

Deep Yellow  Perpetual Credit

Modest diversification

The 3 months correlation between Deep and Perpetual is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Deep Yellow and Perpetual Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perpetual Credit Income and Deep Yellow 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 Deep Yellow are associated (or correlated) with Perpetual Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perpetual Credit Income has no effect on the direction of Deep Yellow i.e., Deep Yellow and Perpetual Credit go up and down completely randomly.

Pair Corralation between Deep Yellow and Perpetual Credit

Assuming the 90 days trading horizon Deep Yellow is expected to generate 3.92 times more return on investment than Perpetual Credit. However, Deep Yellow is 3.92 times more volatile than Perpetual Credit Income. It trades about 0.24 of its potential returns per unit of risk. Perpetual Credit Income is currently generating about 0.08 per unit of risk. If you would invest  91.00  in Deep Yellow on April 17, 2025 and sell it today you would earn a total of  86.00  from holding Deep Yellow or generate 94.51% return on investment over 90 days.

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

Deep Yellow  vs.  Perpetual Credit Income

Deep Yellow

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Deep Yellow are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Deep Yellow unveiled solid returns over the last few months and may actually be approaching a breakup point.

Perpetual Credit Income

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Perpetual Credit Income are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, Perpetual Credit may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Deep Yellow and Perpetual Credit

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

The idea behind Deep Yellow and Perpetual Credit Income 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.