Correlation Between First Quantum and Aguila American

Can any of the company-specific risk be diversified away by investing in both First Quantum and Aguila American 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 Aguila American 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 Aguila American Gold, you can compare the effects of market volatilities on First Quantum and Aguila American 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 Aguila American. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Quantum and Aguila American.

Diversification Opportunities for First Quantum and Aguila American

-0.04

Correlation Coefficient

First Quantum  Aguila American

Good diversification

The 3 months correlation between First and Aguila is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals and Aguila American Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aguila American Gold 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 Aguila American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aguila American Gold has no effect on the direction of First Quantum i.e., First Quantum and Aguila American go up and down completely randomly.

Pair Corralation between First Quantum and Aguila American

Assuming the 90 days horizon First Quantum Minerals is expected to under-perform the Aguila American. But the pink sheet apears to be less risky and, when comparing its historical volatility, First Quantum Minerals is 2.55 times less risky than Aguila American. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Aguila American Gold is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Aguila American Gold on September 20, 2024 and sell it today you would earn a total of  5.00  from holding Aguila American Gold or generate 21.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.32%
Values	Daily Returns

First Quantum Minerals  vs.  Aguila American Gold

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.

Aguila American Gold

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Aguila American Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Aguila American reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Quantum and Aguila American

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

The idea behind First Quantum Minerals and Aguila American Gold 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.