Correlation Between First Quantum and Dor Copper

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

Diversification Opportunities for First Quantum and Dor Copper

-0.19

Correlation Coefficient

First Quantum  Dor Copper

Good diversification

The 3 months correlation between First and Dor is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals and Dor Copper Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dor Copper Mining 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 Dor Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dor Copper Mining has no effect on the direction of First Quantum i.e., First Quantum and Dor Copper go up and down completely randomly.

Pair Corralation between First Quantum and Dor Copper

Assuming the 90 days horizon First Quantum Minerals is expected to under-perform the Dor Copper. But the pink sheet apears to be less risky and, when comparing its historical volatility, First Quantum Minerals is 1.72 times less risky than Dor Copper. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Dor Copper Mining is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Dor Copper Mining on September 20, 2024 and sell it today you would lose (14.00) from holding Dor Copper Mining or give up 56.0% of portfolio value over 90 days.

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

First Quantum Minerals  vs.  Dor Copper Mining

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.

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.

Pair Trading with First Quantum and Dor Copper

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

The idea behind First Quantum Minerals and Dor Copper Mining 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.