Correlation Between Champion Bear and First Quantum
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
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Champion and First is 0.51. 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 0.9 times more return on investment than First Quantum. However, Champion Bear Resources is 1.11 times less risky than First Quantum. It trades about 0.3 of its potential returns per unit of risk. First Quantum Minerals is currently generating about 0.27 per unit of risk. If you would invest 7.50 in Champion Bear Resources on January 26, 2024 and sell it today you would earn a total of 1.50 from holding Champion Bear Resources or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Bear Resources vs. First Quantum Minerals
Performance |
| Timeline |
| Champion Bear Resources |
| First Quantum Minerals |
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.| Champion Bear vs. North American Financial | Champion Bear vs. American Hotel Income | Champion Bear vs. Timbercreek Financial Corp | Champion Bear vs. Toronto Cleantech Capital |
| First Quantum vs. Lundin Mining | First Quantum vs. HudBay Minerals | First Quantum vs. Teck Resources Limited | First Quantum vs. Ivanhoe Mines |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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