Correlation Between Amazon CDR and First Quantum

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

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

Diversification Opportunities for Amazon CDR and First Quantum

0.93

Correlation Coefficient

Amazon CDR  First Quantum

Almost no diversification

The 3 months correlation between Amazon and First is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR 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 Amazon CDR 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 Amazon CDR 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 Amazon CDR i.e., Amazon CDR and First Quantum go up and down completely randomly.

Pair Corralation between Amazon CDR and First Quantum

Assuming the 90 days trading horizon Amazon CDR is expected to generate 1.33 times less return on investment than First Quantum. But when comparing it to its historical volatility, Amazon CDR is 1.34 times less risky than First Quantum. It trades about 0.25 of its potential returns per unit of risk. First Quantum Minerals is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,666  in First Quantum Minerals on April 22, 2025 and sell it today you would earn a total of  673.00  from holding First Quantum Minerals or generate 40.4% return on investment over 90 days.

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

Amazon CDR  vs.  First Quantum Minerals

Amazon CDR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon CDR are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Amazon CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

First Quantum Minerals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Quantum Minerals are ranked lower than 19 (%) 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.

Pair Trading with Amazon CDR and First Quantum

The main advantage of trading using opposite Amazon CDR and First Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR 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 Amazon CDR 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.