Correlation Between Perusahaan Perseroan and First Quantum

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

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

Diversification Opportunities for Perusahaan Perseroan and First Quantum

-0.37

Correlation Coefficient

Perusahaan Perseroan  First Quantum

Very good diversification

The 3 months correlation between Perusahaan and First is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Perseroan PT 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 Perusahaan Perseroan 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 Perusahaan Perseroan PT 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 Perusahaan Perseroan i.e., Perusahaan Perseroan and First Quantum go up and down completely randomly.

Pair Corralation between Perusahaan Perseroan and First Quantum

Assuming the 90 days horizon Perusahaan Perseroan PT is expected to under-perform the First Quantum. But the stock apears to be less risky and, when comparing its historical volatility, Perusahaan Perseroan PT is 2.33 times less risky than First Quantum. The stock trades about -0.02 of its potential returns per unit of risk. The First Quantum Minerals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,009  in First Quantum Minerals on September 20, 2024 and sell it today you would lose (777.00) from holding First Quantum Minerals or give up 38.68% of portfolio value over 90 days.

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

Perusahaan Perseroan PT  vs.  First Quantum Minerals

Perusahaan Perseroan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perusahaan Perseroan PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

First Quantum Minerals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Quantum Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, First Quantum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Perusahaan Perseroan and First Quantum

The main advantage of trading using opposite Perusahaan Perseroan and First Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perusahaan Perseroan 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 Perusahaan Perseroan PT 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.