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

-0.2

Correlation Coefficient

NEXA RESOURCES  TIANQI LITHIUM

Good diversification

The 3 months correlation between NEXA and TIANQI is -0.2. 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 SA is expected to under-perform the TIANQI LITHIUM. In addition to that, NEXA RESOURCES is 1.2 times more volatile than TIANQI LITHIUM H. It trades about -0.15 of its total potential returns per unit of risk. TIANQI LITHIUM H is currently generating about 0.26 per unit of volatility. If you would invest  268.00  in TIANQI LITHIUM H on December 4, 2024 and sell it today you would earn a total of  52.00  from holding TIANQI LITHIUM H or generate 19.4% return on investment over 90 days.

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

NEXA RESOURCES SA  vs.  TIANQI LITHIUM H

NEXA RESOURCES SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days NEXA RESOURCES SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TIANQI LITHIUM H

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TIANQI LITHIUM H are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, TIANQI LITHIUM may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

The idea behind NEXA RESOURCES SA and TIANQI LITHIUM H 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.