Correlation Between Nexa Resources and Alta Copper

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

Diversification Opportunities for Nexa Resources and Alta Copper

0.4

Correlation Coefficient

Nexa Resources  Alta Copper

Very weak diversification

The 3 months correlation between Nexa and Alta is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nexa Resources Peru and Alta Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta Copper Corp 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 Alta Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta Copper Corp has no effect on the direction of Nexa Resources i.e., Nexa Resources and Alta Copper go up and down completely randomly.

Pair Corralation between Nexa Resources and Alta Copper

Assuming the 90 days trading horizon Nexa Resources Peru is expected to generate 0.05 times more return on investment than Alta Copper. However, Nexa Resources Peru is 18.37 times less risky than Alta Copper. It trades about -0.04 of its potential returns per unit of risk. Alta Copper Corp is currently generating about -0.09 per unit of risk. If you would invest  157.00  in Nexa Resources Peru on October 26, 2024 and sell it today you would lose (2.00) from holding Nexa Resources Peru or give up 1.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	36.0%
Values	Daily Returns

Nexa Resources Peru  vs.  Alta Copper Corp

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 latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Alta Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alta Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Nexa Resources and Alta Copper

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

The idea behind Nexa Resources Peru and Alta Copper Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.