Correlation Between Nexa Resources and Glencore PLC

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

Diversification Opportunities for Nexa Resources and Glencore PLC

0.1

Correlation Coefficient

Nexa Resources  Glencore PLC

Average diversification

The 3 months correlation between Nexa and Glencore is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nexa Resources SA and Glencore PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC ADR 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 Glencore PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glencore PLC ADR has no effect on the direction of Nexa Resources i.e., Nexa Resources and Glencore PLC go up and down completely randomly.

Pair Corralation between Nexa Resources and Glencore PLC

Given the investment horizon of 90 days Nexa Resources SA is expected to generate 0.99 times more return on investment than Glencore PLC. However, Nexa Resources SA is 1.01 times less risky than Glencore PLC. It trades about 0.15 of its potential returns per unit of risk. Glencore PLC ADR is currently generating about -0.02 per unit of risk. If you would invest  771.00  in Nexa Resources SA on September 12, 2024 and sell it today you would earn a total of  43.00  from holding Nexa Resources SA or generate 5.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Nexa Resources SA  vs.  Glencore PLC ADR

Nexa Resources SA

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nexa Resources SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Nexa Resources sustained solid returns over the last few months and may actually be approaching a breakup point.

Glencore PLC ADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Glencore PLC ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Glencore PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nexa Resources and Glencore PLC

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

The idea behind Nexa Resources SA and Glencore PLC ADR 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.