Correlation Between NEXA RESOURCES and DAIKIN INDUSTRUNSPADR

Can any of the company-specific risk be diversified away by investing in both NEXA RESOURCES and DAIKIN INDUSTRUNSPADR 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 DAIKIN INDUSTRUNSPADR 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 DAIKIN INDUSTRUNSPADR, you can compare the effects of market volatilities on NEXA RESOURCES and DAIKIN INDUSTRUNSPADR 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 DAIKIN INDUSTRUNSPADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXA RESOURCES and DAIKIN INDUSTRUNSPADR.

Diversification Opportunities for NEXA RESOURCES and DAIKIN INDUSTRUNSPADR

-0.55

Correlation Coefficient

NEXA RESOURCES  DAIKIN INDUSTRUNSPADR

Excellent diversification

The 3 months correlation between NEXA and DAIKIN is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NEXA RESOURCES SA and DAIKIN INDUSTRUNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIKIN INDUSTRUNSPADR 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 DAIKIN INDUSTRUNSPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIKIN INDUSTRUNSPADR has no effect on the direction of NEXA RESOURCES i.e., NEXA RESOURCES and DAIKIN INDUSTRUNSPADR go up and down completely randomly.

Pair Corralation between NEXA RESOURCES and DAIKIN INDUSTRUNSPADR

Assuming the 90 days horizon NEXA RESOURCES SA is expected to generate 0.87 times more return on investment than DAIKIN INDUSTRUNSPADR. However, NEXA RESOURCES SA is 1.14 times less risky than DAIKIN INDUSTRUNSPADR. It trades about 0.04 of its potential returns per unit of risk. DAIKIN INDUSTRUNSPADR is currently generating about 0.0 per unit of risk. If you would invest  528.00  in NEXA RESOURCES SA on September 26, 2024 and sell it today you would earn a total of  212.00  from holding NEXA RESOURCES SA or generate 40.15% return on investment over 90 days.

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

NEXA RESOURCES SA  vs.  DAIKIN INDUSTRUNSPADR

NEXA RESOURCES SA

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NEXA RESOURCES SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NEXA RESOURCES reported solid returns over the last few months and may actually be approaching a breakup point.

DAIKIN INDUSTRUNSPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DAIKIN INDUSTRUNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with NEXA RESOURCES and DAIKIN INDUSTRUNSPADR

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

The idea behind NEXA RESOURCES SA and DAIKIN INDUSTRUNSPADR 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.