Correlation Between First Quantum and GLG LIFE

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

Diversification Opportunities for First Quantum and GLG LIFE

0.0

Correlation Coefficient

First Quantum  GLG LIFE

Pay attention - limited upside

The 3 months correlation between First and GLG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals and GLG LIFE TECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLG LIFE TECH 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 GLG LIFE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLG LIFE TECH has no effect on the direction of First Quantum i.e., First Quantum and GLG LIFE go up and down completely randomly.

Pair Corralation between First Quantum and GLG LIFE

Assuming the 90 days horizon First Quantum Minerals is expected to under-perform the GLG LIFE. But the stock apears to be less risky and, when comparing its historical volatility, First Quantum Minerals is 11.68 times less risky than GLG LIFE. The stock trades about 0.0 of its potential returns per unit of risk. The GLG LIFE TECH is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.40  in GLG LIFE TECH on October 4, 2024 and sell it today you would earn a total of  0.60  from holding GLG LIFE TECH or generate 42.86% return on investment over 90 days.

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

First Quantum Minerals  vs.  GLG LIFE TECH

First Quantum Minerals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Quantum Minerals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, First Quantum is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

GLG LIFE TECH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GLG LIFE TECH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GLG LIFE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with First Quantum and GLG LIFE

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

The idea behind First Quantum Minerals and GLG LIFE TECH 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.