Correlation Between Perma-Fix Environmental and First Quantum

Can any of the company-specific risk be diversified away by investing in both Perma-Fix Environmental and First Quantum 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 Perma-Fix Environmental and First Quantum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perma Fix Environmental Services and First Quantum Minerals, you can compare the effects of market volatilities on Perma-Fix Environmental and First Quantum 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 Perma-Fix Environmental with a short position of First Quantum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perma-Fix Environmental and First Quantum.

Diversification Opportunities for Perma-Fix Environmental and First Quantum

-0.02

Correlation Coefficient

Perma-Fix Environmental  First Quantum

Good diversification

The 3 months correlation between Perma-Fix and First is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Perma Fix Environmental Servic and First Quantum Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Quantum Minerals and Perma-Fix Environmental 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 Perma Fix Environmental Services are associated (or correlated) with First Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Quantum Minerals has no effect on the direction of Perma-Fix Environmental i.e., Perma-Fix Environmental and First Quantum go up and down completely randomly.

Pair Corralation between Perma-Fix Environmental and First Quantum

Assuming the 90 days trading horizon Perma Fix Environmental Services is expected to under-perform the First Quantum. In addition to that, Perma-Fix Environmental is 1.3 times more volatile than First Quantum Minerals. It trades about -0.36 of its total potential returns per unit of risk. First Quantum Minerals is currently generating about -0.05 per unit of volatility. If you would invest  1,299  in First Quantum Minerals on September 24, 2024 and sell it today you would lose (54.00) from holding First Quantum Minerals or give up 4.16% of portfolio value over 90 days.

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

Perma Fix Environmental Servic  vs.  First Quantum Minerals

Perma Fix Environmental

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Perma Fix Environmental Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Perma-Fix Environmental is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

First Quantum Minerals

Risk-Adjusted Performance

0 of 100

Very 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Perma-Fix Environmental and First Quantum

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

The idea behind Perma Fix Environmental Services and First Quantum Minerals 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.