Correlation Between First Quantum and Arizona Sonoran

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

Diversification Opportunities for First Quantum and Arizona Sonoran

0.21

Correlation Coefficient

First Quantum  Arizona Sonoran

Modest diversification

The 3 months correlation between First and Arizona is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals and Arizona Sonoran Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arizona Sonoran Copper 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 Arizona Sonoran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arizona Sonoran Copper has no effect on the direction of First Quantum i.e., First Quantum and Arizona Sonoran go up and down completely randomly.

Pair Corralation between First Quantum and Arizona Sonoran

Assuming the 90 days horizon First Quantum Minerals is expected to generate 0.92 times more return on investment than Arizona Sonoran. However, First Quantum Minerals is 1.09 times less risky than Arizona Sonoran. It trades about 0.06 of its potential returns per unit of risk. Arizona Sonoran Copper is currently generating about -0.01 per unit of risk. If you would invest  862.00  in First Quantum Minerals on September 20, 2024 and sell it today you would earn a total of  371.00  from holding First Quantum Minerals or generate 43.04% return on investment over 90 days.

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

First Quantum Minerals  vs.  Arizona Sonoran Copper

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.

Arizona Sonoran Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arizona Sonoran Copper has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with First Quantum and Arizona Sonoran

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

The idea behind First Quantum Minerals and Arizona Sonoran Copper 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.