Correlation Between NEXA RESOURCES and StrikePoint Gold

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

Diversification Opportunities for NEXA RESOURCES and StrikePoint Gold

-0.3

Correlation Coefficient

NEXA RESOURCES  StrikePoint Gold

Very good diversification

The 3 months correlation between NEXA and StrikePoint is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding NEXA RESOURCES SA and StrikePoint Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StrikePoint Gold 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 StrikePoint Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StrikePoint Gold has no effect on the direction of NEXA RESOURCES i.e., NEXA RESOURCES and StrikePoint Gold go up and down completely randomly.

Pair Corralation between NEXA RESOURCES and StrikePoint Gold

Assuming the 90 days horizon NEXA RESOURCES is expected to generate 1.06 times less return on investment than StrikePoint Gold. But when comparing it to its historical volatility, NEXA RESOURCES SA is 3.93 times less risky than StrikePoint Gold. It trades about 0.04 of its potential returns per unit of risk. StrikePoint Gold is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  56.00  in StrikePoint Gold on September 26, 2024 and sell it today you would lose (47.80) from holding StrikePoint Gold or give up 85.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

NEXA RESOURCES SA  vs.  StrikePoint Gold

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.

StrikePoint Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StrikePoint Gold 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NEXA RESOURCES and StrikePoint Gold

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

The idea behind NEXA RESOURCES SA and StrikePoint Gold 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.