Correlation Between First Quantum and XXIX Metal

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

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

Diversification Opportunities for First Quantum and XXIX Metal

-0.16

Correlation Coefficient

First Quantum  XXIX Metal

Good diversification

The 3 months correlation between First and XXIX is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals and XXIX Metal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XXIX Metal Corp and First Quantum 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 First Quantum Minerals are associated (or correlated) with XXIX Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XXIX Metal Corp has no effect on the direction of First Quantum i.e., First Quantum and XXIX Metal go up and down completely randomly.

Pair Corralation between First Quantum and XXIX Metal

Assuming the 90 days horizon First Quantum Minerals is expected to generate 0.67 times more return on investment than XXIX Metal. However, First Quantum Minerals is 1.5 times less risky than XXIX Metal. It trades about 0.03 of its potential returns per unit of risk. XXIX Metal Corp is currently generating about -0.02 per unit of risk. If you would invest  1,867  in First Quantum Minerals on October 6, 2024 and sell it today you would earn a total of  44.00  from holding First Quantum Minerals or generate 2.36% return on investment over 90 days.

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

First Quantum Minerals  vs.  XXIX Metal Corp

First Quantum Minerals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Quantum Minerals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, First Quantum is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

XXIX Metal Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XXIX Metal Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, XXIX Metal is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First Quantum and XXIX Metal

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

The idea behind First Quantum Minerals and XXIX Metal Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.