Correlation Between NEXA RESOURCES and AVITA Medical
Can any of the company-specific risk be diversified away by investing in both NEXA RESOURCES and AVITA Medical 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 AVITA Medical 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 AVITA Medical, you can compare the effects of market volatilities on NEXA RESOURCES and AVITA Medical 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 AVITA Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXA RESOURCES and AVITA Medical.
Diversification Opportunities for NEXA RESOURCES and AVITA Medical
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NEXA and AVITA is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding NEXA RESOURCES SA and AVITA Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVITA Medical 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 AVITA Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVITA Medical has no effect on the direction of NEXA RESOURCES i.e., NEXA RESOURCES and AVITA Medical go up and down completely randomly.
Pair Corralation between NEXA RESOURCES and AVITA Medical
Assuming the 90 days horizon NEXA RESOURCES is expected to generate 2.85 times less return on investment than AVITA Medical. But when comparing it to its historical volatility, NEXA RESOURCES SA is 1.75 times less risky than AVITA Medical. It trades about 0.1 of its potential returns per unit of risk. AVITA Medical is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 192.00 in AVITA Medical on September 3, 2024 and sell it today you would earn a total of 48.00 from holding AVITA Medical or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEXA RESOURCES SA vs. AVITA Medical
Performance |
| Timeline |
| NEXA RESOURCES SA |
| AVITA Medical |
NEXA RESOURCES and AVITA Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXA RESOURCES and AVITA Medical
The main advantage of trading using opposite NEXA RESOURCES and AVITA Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXA RESOURCES position performs unexpectedly, AVITA Medical 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 AVITA Medical will offset losses from the drop in AVITA Medical'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 |
| AVITA Medical vs. Tradeweb Markets | AVITA Medical vs. Mitsui Chemicals | AVITA Medical vs. The Trade Desk | AVITA Medical vs. USWE SPORTS AB |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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