Correlation Between Nexa Resources and Osisko Gold

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

Diversification Opportunities for Nexa Resources and Osisko Gold

0.89

Correlation Coefficient

Nexa Resources  Osisko Gold

Very poor diversification

The 3 months correlation between Nexa and Osisko is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Nexa Resources SA and Osisko Gold Ro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osisko Gold Ro 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 Osisko Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osisko Gold Ro has no effect on the direction of Nexa Resources i.e., Nexa Resources and Osisko Gold go up and down completely randomly.

Pair Corralation between Nexa Resources and Osisko Gold

Given the investment horizon of 90 days Nexa Resources is expected to generate 3.33 times less return on investment than Osisko Gold. But when comparing it to its historical volatility, Nexa Resources SA is 1.0 times less risky than Osisko Gold. It trades about 0.01 of its potential returns per unit of risk. Osisko Gold Ro is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,861  in Osisko Gold Ro on September 4, 2024 and sell it today you would earn a total of  53.00  from holding Osisko Gold Ro or generate 2.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Nexa Resources SA  vs.  Osisko Gold Ro

Nexa Resources SA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nexa Resources SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Nexa Resources sustained solid returns over the last few months and may actually be approaching a breakup point.

Osisko Gold Ro

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Osisko Gold Ro are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Osisko Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexa Resources and Osisko Gold

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

The idea behind Nexa Resources SA and Osisko Gold Ro 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.