Correlation Between Champion Bear and First Quantum

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Can any of the company-specific risk be diversified away by investing in both Champion Bear 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 Champion Bear and First Quantum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Bear Resources and First Quantum Minerals, you can compare the effects of market volatilities on Champion Bear 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 Champion Bear with a short position of First Quantum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Bear and First Quantum.

Diversification Opportunities for Champion Bear and First Quantum

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Champion and First is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Champion Bear Resources 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 Champion Bear 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 Champion Bear Resources 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 Champion Bear i.e., Champion Bear and First Quantum go up and down completely randomly.

Pair Corralation between Champion Bear and First Quantum

Assuming the 90 days horizon Champion Bear Resources is expected to generate 2.59 times more return on investment than First Quantum. However, Champion Bear is 2.59 times more volatile than First Quantum Minerals. It trades about 0.04 of its potential returns per unit of risk. First Quantum Minerals is currently generating about 0.0 per unit of risk. If you would invest  12.00  in Champion Bear Resources on December 19, 2023 and sell it today you would lose (4.50) from holding Champion Bear Resources or give up 37.5% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.73%
ValuesDaily Returns

Champion Bear Resources  vs.  First Quantum Minerals

 Performance 
       Timeline  
Champion Bear Resources 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Champion Bear Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Champion Bear showed solid returns over the last few months and may actually be approaching a breakup point.
First Quantum Minerals 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in First Quantum Minerals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, First Quantum displayed solid returns over the last few months and may actually be approaching a breakup point.

Champion Bear and First Quantum Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Champion Bear and First Quantum

The main advantage of trading using opposite Champion Bear and First Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Bear 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 Champion Bear Resources 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.
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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