Correlation Between Nexa Resources and Fortuna Silver

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

Diversification Opportunities for Nexa Resources and Fortuna Silver

-0.43

Correlation Coefficient

Nexa Resources  Fortuna Silver

Very good diversification

The 3 months correlation between Nexa and Fortuna is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Nexa Resources SA and Fortuna Silver Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortuna Silver Mines 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 Fortuna Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortuna Silver Mines has no effect on the direction of Nexa Resources i.e., Nexa Resources and Fortuna Silver go up and down completely randomly.

Pair Corralation between Nexa Resources and Fortuna Silver

Given the investment horizon of 90 days Nexa Resources SA is expected to under-perform the Fortuna Silver. In addition to that, Nexa Resources is 1.28 times more volatile than Fortuna Silver Mines. It trades about -0.1 of its total potential returns per unit of risk. Fortuna Silver Mines is currently generating about 0.18 per unit of volatility. If you would invest  432.00  in Fortuna Silver Mines on December 27, 2024 and sell it today you would earn a total of  192.00  from holding Fortuna Silver Mines or generate 44.44% 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.  Fortuna Silver Mines

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 unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Fortuna Silver Mines

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortuna Silver Mines are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Fortuna Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexa Resources and Fortuna Silver

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

The idea behind Nexa Resources SA and Fortuna Silver Mines 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.