Correlation Between NEXA RESOURCES and TIANQI LITHIUM
Can any of the company-specific risk be diversified away by investing in both NEXA RESOURCES and TIANQI LITHIUM 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 NEXA RESOURCES and TIANQI LITHIUM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXA RESOURCES SA and TIANQI LITHIUM H, you can compare the effects of market volatilities on NEXA RESOURCES and TIANQI LITHIUM 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 NEXA RESOURCES with a short position of TIANQI LITHIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXA RESOURCES and TIANQI LITHIUM.
Diversification Opportunities for NEXA RESOURCES and TIANQI LITHIUM
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NEXA and TIANQI is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding NEXA RESOURCES SA and TIANQI LITHIUM H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIANQI LITHIUM H and NEXA RESOURCES 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 NEXA RESOURCES SA are associated (or correlated) with TIANQI LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIANQI LITHIUM H has no effect on the direction of NEXA RESOURCES i.e., NEXA RESOURCES and TIANQI LITHIUM go up and down completely randomly.
Pair Corralation between NEXA RESOURCES and TIANQI LITHIUM
Assuming the 90 days horizon NEXA RESOURCES is expected to generate 2.35 times less return on investment than TIANQI LITHIUM. But when comparing it to its historical volatility, NEXA RESOURCES SA is 2.42 times less risky than TIANQI LITHIUM. It trades about 0.04 of its potential returns per unit of risk. TIANQI LITHIUM H is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 197.00 in TIANQI LITHIUM H on September 3, 2024 and sell it today you would earn a total of 113.00 from holding TIANQI LITHIUM H or generate 57.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEXA RESOURCES SA vs. TIANQI LITHIUM H
Performance |
| Timeline |
| NEXA RESOURCES SA |
| TIANQI LITHIUM H |
NEXA RESOURCES and TIANQI LITHIUM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXA RESOURCES and TIANQI LITHIUM
The main advantage of trading using opposite NEXA RESOURCES and TIANQI LITHIUM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXA RESOURCES position performs unexpectedly, TIANQI LITHIUM 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 TIANQI LITHIUM will offset losses from the drop in TIANQI LITHIUM's long position.| NEXA RESOURCES vs. G III Apparel Group | NEXA RESOURCES vs. MTI WIRELESS EDGE | NEXA RESOURCES vs. Tower One Wireless | NEXA RESOURCES vs. International Consolidated Airlines |
| TIANQI LITHIUM vs. MCEWEN MINING INC | TIANQI LITHIUM vs. Lendlease Group | TIANQI LITHIUM vs. MTI WIRELESS EDGE | TIANQI LITHIUM vs. WillScot Mobile Mini |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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