Correlation Between First Quantum and CopperCorp Resources

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

Diversification Opportunities for First Quantum and CopperCorp Resources

0.33

Correlation Coefficient

First Quantum  CopperCorp Resources

Weak diversification

The 3 months correlation between First and CopperCorp is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals and CopperCorp Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CopperCorp Resources 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 CopperCorp Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CopperCorp Resources has no effect on the direction of First Quantum i.e., First Quantum and CopperCorp Resources go up and down completely randomly.

Pair Corralation between First Quantum and CopperCorp Resources

Assuming the 90 days horizon First Quantum Minerals is expected to under-perform the CopperCorp Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, First Quantum Minerals is 4.5 times less risky than CopperCorp Resources. The pink sheet trades about -0.01 of its potential returns per unit of risk. The CopperCorp Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  12.00  in CopperCorp Resources on September 19, 2024 and sell it today you would earn a total of  3.00  from holding CopperCorp Resources or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

First Quantum Minerals  vs.  CopperCorp Resources

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.

CopperCorp Resources

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CopperCorp Resources are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CopperCorp Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Quantum and CopperCorp Resources

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

The idea behind First Quantum Minerals and CopperCorp Resources 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.