Correlation Between First Quantum and KGHM Polska

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

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

Diversification Opportunities for First Quantum and KGHM Polska

0.84

Correlation Coefficient

First Quantum  KGHM Polska

Very poor diversification

The 3 months correlation between First and KGHM is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals and KGHM Polska Miedz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGHM Polska Miedz and First Quantum 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 First Quantum Minerals are associated (or correlated) with KGHM Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGHM Polska Miedz has no effect on the direction of First Quantum i.e., First Quantum and KGHM Polska go up and down completely randomly.

Pair Corralation between First Quantum and KGHM Polska

Assuming the 90 days horizon First Quantum Minerals is expected to generate 1.02 times more return on investment than KGHM Polska. However, First Quantum is 1.02 times more volatile than KGHM Polska Miedz. It trades about 0.24 of its potential returns per unit of risk. KGHM Polska Miedz is currently generating about 0.06 per unit of risk. If you would invest  1,054  in First Quantum Minerals on April 23, 2025 and sell it today you would earn a total of  416.00  from holding First Quantum Minerals or generate 39.47% return on investment over 90 days.

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

First Quantum Minerals  vs.  KGHM Polska Miedz

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 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, First Quantum reported solid returns over the last few months and may actually be approaching a breakup point.

KGHM Polska Miedz

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KGHM Polska Miedz are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical indicators, KGHM Polska may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with First Quantum and KGHM Polska

The main advantage of trading using opposite First Quantum and KGHM Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Quantum position performs unexpectedly, KGHM Polska 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 KGHM Polska will offset losses from the drop in KGHM Polska's long position.

The idea behind First Quantum Minerals and KGHM Polska Miedz 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.