Correlation Between Metalurgica Peruana and Nexa Resources

Can any of the company-specific risk be diversified away by investing in both Metalurgica Peruana and Nexa Resources 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 Metalurgica Peruana and Nexa Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Metalurgica Peruana SA and Nexa Resources Peru, you can compare the effects of market volatilities on Metalurgica Peruana and Nexa Resources 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 Metalurgica Peruana with a short position of Nexa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Peruana and Nexa Resources.

Diversification Opportunities for Metalurgica Peruana and Nexa Resources

0.0

Correlation Coefficient

Metalurgica Peruana  Nexa Resources

Pay attention - limited upside

The 3 months correlation between Metalurgica and Nexa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Peruana SA and Nexa Resources Peru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexa Resources Peru and Metalurgica Peruana 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 Metalurgica Peruana SA are associated (or correlated) with Nexa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexa Resources Peru has no effect on the direction of Metalurgica Peruana i.e., Metalurgica Peruana and Nexa Resources go up and down completely randomly.

Pair Corralation between Metalurgica Peruana and Nexa Resources

If you would invest (100.00) in Metalurgica Peruana SA on December 25, 2024 and sell it today you would earn a total of  100.00  from holding Metalurgica Peruana SA or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Metalurgica Peruana SA  vs.  Nexa Resources Peru

Metalurgica Peruana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metalurgica Peruana SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Metalurgica Peruana is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nexa Resources Peru

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexa Resources Peru has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Metalurgica Peruana and Nexa Resources

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

The idea behind Metalurgica Peruana SA and Nexa Resources Peru 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.