Correlation Between First Quantum and SLR Investment

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

Diversification Opportunities for First Quantum and SLR Investment

0.49

Correlation Coefficient

First Quantum  SLR Investment

Very weak diversification

The 3 months correlation between First and SLR is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of First Quantum i.e., First Quantum and SLR Investment go up and down completely randomly.

Pair Corralation between First Quantum and SLR Investment

Assuming the 90 days horizon First Quantum is expected to generate 2.15 times less return on investment than SLR Investment. In addition to that, First Quantum is 2.87 times more volatile than SLR Investment Corp. It trades about 0.01 of its total potential returns per unit of risk. SLR Investment Corp is currently generating about 0.06 per unit of volatility. If you would invest  1,412  in SLR Investment Corp on September 25, 2024 and sell it today you would earn a total of  129.00  from holding SLR Investment Corp or generate 9.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.22%
Values	Daily Returns

First Quantum Minerals  vs.  SLR Investment Corp

First Quantum Minerals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Quantum Minerals are ranked lower than 1 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

SLR Investment Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SLR Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Quantum and SLR Investment

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

The idea behind First Quantum Minerals and SLR Investment Corp 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.