Correlation Between Nexa Resources and South32
Can any of the company-specific risk be diversified away by investing in both Nexa Resources and South32 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 South32 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 South32 Limited, you can compare the effects of market volatilities on Nexa Resources and South32 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 South32. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexa Resources and South32.
Diversification Opportunities for Nexa Resources and South32
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nexa and South32 is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nexa Resources SA and South32 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South32 Limited 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 South32. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South32 Limited has no effect on the direction of Nexa Resources i.e., Nexa Resources and South32 go up and down completely randomly.
Pair Corralation between Nexa Resources and South32
Given the investment horizon of 90 days Nexa Resources SA is expected to generate 0.56 times more return on investment than South32. However, Nexa Resources SA is 1.78 times less risky than South32. It trades about 0.04 of its potential returns per unit of risk. South32 Limited is currently generating about 0.02 per unit of risk. If you would invest 571.00 in Nexa Resources SA on August 26, 2024 and sell it today you would earn a total of 189.00 from holding Nexa Resources SA or generate 33.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 74.87% |
| Values | Daily Returns |
Nexa Resources SA vs. South32 Limited
Performance |
| Timeline |
| Nexa Resources SA |
| South32 Limited |
Nexa Resources and South32 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexa Resources and South32
The main advantage of trading using opposite Nexa Resources and South32 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexa Resources position performs unexpectedly, South32 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 South32 will offset losses from the drop in South32's long position.| Nexa Resources vs. Materion | Nexa Resources vs. Fury Gold Mines | Nexa Resources vs. Eskay Mining Corp | Nexa Resources vs. EMX Royalty Corp |
| South32 vs. IGO Limited | South32 vs. Anglo American PLC | South32 vs. TNG Limited | South32 vs. Amarc Resources |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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