Correlation Between NEXA RESOURCES and BW OFFSHORE

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

Diversification Opportunities for NEXA RESOURCES and BW OFFSHORE

-0.38

Correlation Coefficient

NEXA RESOURCES  BW OFFSHORE

Very good diversification

The 3 months correlation between NEXA and XY81 is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding NEXA RESOURCES SA and BW OFFSHORE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW OFFSHORE LTD 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 BW OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW OFFSHORE LTD has no effect on the direction of NEXA RESOURCES i.e., NEXA RESOURCES and BW OFFSHORE go up and down completely randomly.

Pair Corralation between NEXA RESOURCES and BW OFFSHORE

Assuming the 90 days horizon NEXA RESOURCES SA is expected to generate 1.08 times more return on investment than BW OFFSHORE. However, NEXA RESOURCES is 1.08 times more volatile than BW OFFSHORE LTD. It trades about 0.02 of its potential returns per unit of risk. BW OFFSHORE LTD is currently generating about 0.01 per unit of risk. If you would invest  675.00  in NEXA RESOURCES SA on October 7, 2024 and sell it today you would earn a total of  10.00  from holding NEXA RESOURCES SA or generate 1.48% 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.  BW OFFSHORE LTD

NEXA RESOURCES SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NEXA RESOURCES SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NEXA RESOURCES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BW OFFSHORE LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BW OFFSHORE LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BW OFFSHORE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NEXA RESOURCES and BW OFFSHORE

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

The idea behind NEXA RESOURCES SA and BW OFFSHORE LTD 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.