Correlation Between Dor Copper and First Quantum

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

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

Diversification Opportunities for Dor Copper and First Quantum

-0.19

Correlation Coefficient

Dor Copper  First Quantum

Good diversification

The 3 months correlation between Dor and First is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dor Copper Mining 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 Dor Copper 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 Dor Copper Mining 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 Dor Copper i.e., Dor Copper and First Quantum go up and down completely randomly.

Pair Corralation between Dor Copper and First Quantum

Assuming the 90 days horizon Dor Copper Mining is expected to generate 2.04 times more return on investment than First Quantum. However, Dor Copper is 2.04 times more volatile than First Quantum Minerals. It trades about 0.04 of its potential returns per unit of risk. First Quantum Minerals is currently generating about 0.06 per unit of risk. If you would invest  9.60  in Dor Copper Mining on September 20, 2024 and sell it today you would earn a total of  1.40  from holding Dor Copper Mining or generate 14.58% return on investment over 90 days.

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

Dor Copper Mining  vs.  First Quantum Minerals

Dor Copper Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dor Copper Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Dor Copper reported solid returns over the last few months and may actually be approaching a breakup point.

First Quantum Minerals

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Dor Copper and First Quantum

The main advantage of trading using opposite Dor Copper and First Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dor Copper 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 Dor Copper Mining 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.