Correlation Between Anglo American and First Quantum

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

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

Diversification Opportunities for Anglo American and First Quantum

0.58

Correlation Coefficient

Anglo American  First Quantum

Very weak diversification

The 3 months correlation between Anglo and First is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American PLC 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 Anglo American 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 Anglo American PLC 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 Anglo American i.e., Anglo American and First Quantum go up and down completely randomly.

Pair Corralation between Anglo American and First Quantum

Assuming the 90 days horizon Anglo American is expected to generate 3.28 times less return on investment than First Quantum. In addition to that, Anglo American is 1.06 times more volatile than First Quantum Minerals. It trades about 0.04 of its total potential returns per unit of risk. First Quantum Minerals is currently generating about 0.14 per unit of volatility. If you would invest  1,441  in First Quantum Minerals on May 12, 2025 and sell it today you would earn a total of  287.00  from holding First Quantum Minerals or generate 19.92% return on investment over 90 days.

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

Anglo American PLC  vs.  First Quantum Minerals

Anglo American PLC

Risk-Adjusted Performance

Soft

Over the last 90 days Anglo American PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Anglo American is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Quantum Minerals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Quantum Minerals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, First Quantum reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anglo American and First Quantum

The main advantage of trading using opposite Anglo American and First Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American 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 Anglo American PLC 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.