Correlation Between Nexa Resources and Banco De

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

Diversification Opportunities for Nexa Resources and Banco De

-0.28

Correlation Coefficient

Nexa Resources  Banco De

Very good diversification

The 3 months correlation between Nexa and Banco is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nexa Resources Peru and Banco de Credito in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco de Credito 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 Banco De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco de Credito has no effect on the direction of Nexa Resources i.e., Nexa Resources and Banco De go up and down completely randomly.

Pair Corralation between Nexa Resources and Banco De

Assuming the 90 days trading horizon Nexa Resources Peru is expected to under-perform the Banco De. In addition to that, Nexa Resources is 1.77 times more volatile than Banco de Credito. It trades about -0.23 of its total potential returns per unit of risk. Banco de Credito is currently generating about 0.13 per unit of volatility. If you would invest  397.00  in Banco de Credito on October 10, 2024 and sell it today you would earn a total of  13.00  from holding Banco de Credito or generate 3.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.0%
Values	Daily Returns

Nexa Resources Peru  vs.  Banco de Credito

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 inconsistent 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.

Banco de Credito

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banco de Credito are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Banco De exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexa Resources and Banco De

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

The idea behind Nexa Resources Peru and Banco de Credito 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.