Correlation Between Nexa Resources and Apple

Can any of the company-specific risk be diversified away by investing in both Nexa Resources and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nexa Resources Peru and Apple Inc, you can compare the effects of market volatilities on Nexa Resources and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexa Resources and Apple.

Diversification Opportunities for Nexa Resources and Apple

-0.74

Correlation Coefficient

Nexa Resources  Apple

Pay attention - limited upside

The 3 months correlation between Nexa and Apple is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nexa Resources Peru and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Peru are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Nexa Resources i.e., Nexa Resources and Apple go up and down completely randomly.

Pair Corralation between Nexa Resources and Apple

Assuming the 90 days trading horizon Nexa Resources Peru is expected to under-perform the Apple. In addition to that, Nexa Resources is 2.43 times more volatile than Apple Inc. It trades about -0.23 of its total potential returns per unit of risk. Apple Inc is currently generating about -0.03 per unit of volatility. If you would invest  24,700  in Apple Inc on October 11, 2024 and sell it today you would lose (150.00) from holding Apple Inc or give up 0.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	47.37%
Values	Daily Returns

Nexa Resources Peru  vs.  Apple Inc

Nexa Resources Peru

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexa Resources Peru has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Nexa Resources is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Apple Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nexa Resources and Apple

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

The idea behind Nexa Resources Peru and Apple Inc 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.