Correlation Between Antofagasta PLC and First Quantum

Can any of the company-specific risk be diversified away by investing in both Antofagasta PLC and First Quantum 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 Antofagasta PLC and First Quantum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Antofagasta PLC and First Quantum Minerals, you can compare the effects of market volatilities on Antofagasta PLC and First Quantum 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 Antofagasta PLC with a short position of First Quantum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antofagasta PLC and First Quantum.

Diversification Opportunities for Antofagasta PLC and First Quantum

0.48

Correlation Coefficient

Antofagasta PLC  First Quantum

Very weak diversification

The 3 months correlation between Antofagasta and First is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Antofagasta PLC and First Quantum Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Quantum Minerals and Antofagasta PLC 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 Antofagasta PLC are associated (or correlated) with First Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Quantum Minerals has no effect on the direction of Antofagasta PLC i.e., Antofagasta PLC and First Quantum go up and down completely randomly.

Pair Corralation between Antofagasta PLC and First Quantum

Assuming the 90 days horizon Antofagasta PLC is expected to generate 0.65 times more return on investment than First Quantum. However, Antofagasta PLC is 1.53 times less risky than First Quantum. It trades about 0.13 of its potential returns per unit of risk. First Quantum Minerals is currently generating about 0.04 per unit of risk. If you would invest  2,105  in Antofagasta PLC on December 30, 2024 and sell it today you would earn a total of  410.00  from holding Antofagasta PLC or generate 19.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.94%
Values	Daily Returns

Antofagasta PLC  vs.  First Quantum Minerals

Antofagasta PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Antofagasta PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Antofagasta PLC reported solid returns over the last few months and may actually be approaching a breakup point.

First Quantum Minerals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Quantum Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, First Quantum may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Antofagasta PLC and First Quantum

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

The idea behind Antofagasta PLC and First Quantum Minerals 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.