Correlation Between First Quantum and Scientific Games

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

Diversification Opportunities for First Quantum and Scientific Games

0.45

Correlation Coefficient

First Quantum  Scientific Games

Very weak diversification

The 3 months correlation between First and Scientific is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals and Scientific Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientific Games 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 Scientific Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientific Games has no effect on the direction of First Quantum i.e., First Quantum and Scientific Games go up and down completely randomly.

Pair Corralation between First Quantum and Scientific Games

Assuming the 90 days horizon First Quantum Minerals is expected to under-perform the Scientific Games. In addition to that, First Quantum is 1.94 times more volatile than Scientific Games. It trades about 0.0 of its total potential returns per unit of risk. Scientific Games is currently generating about 0.05 per unit of volatility. If you would invest  5,500  in Scientific Games on October 3, 2024 and sell it today you would earn a total of  2,600  from holding Scientific Games or generate 47.27% return on investment over 90 days.

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

First Quantum Minerals  vs.  Scientific Games

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 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.

Scientific Games

Risk-Adjusted Performance

2 of 100

Insignificant

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

Pair Trading with First Quantum and Scientific Games

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

The idea behind First Quantum Minerals and Scientific Games 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.