Correlation Between Nexa Resources and Pesquera Exalmar

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

Diversification Opportunities for Nexa Resources and Pesquera Exalmar

-0.5

Correlation Coefficient

Nexa Resources  Pesquera Exalmar

Very good diversification

The 3 months correlation between Nexa and Pesquera is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nexa Resources Peru and Pesquera Exalmar SAA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pesquera Exalmar SAA 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 Pesquera Exalmar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pesquera Exalmar SAA has no effect on the direction of Nexa Resources i.e., Nexa Resources and Pesquera Exalmar go up and down completely randomly.

Pair Corralation between Nexa Resources and Pesquera Exalmar

Assuming the 90 days trading horizon Nexa Resources Peru is expected to under-perform the Pesquera Exalmar. But the stock apears to be less risky and, when comparing its historical volatility, Nexa Resources Peru is 1.2 times less risky than Pesquera Exalmar. The stock trades about -0.12 of its potential returns per unit of risk. The Pesquera Exalmar SAA is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  225.00  in Pesquera Exalmar SAA on October 11, 2024 and sell it today you would earn a total of  33.00  from holding Pesquera Exalmar SAA or generate 14.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	34.04%
Values	Daily Returns

Nexa Resources Peru  vs.  Pesquera Exalmar SAA

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 inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pesquera Exalmar SAA

Risk-Adjusted Performance

0 of 100

Very Strong

Over the last 90 days Pesquera Exalmar SAA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat unsteady primary indicators, Pesquera Exalmar sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexa Resources and Pesquera Exalmar

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

The idea behind Nexa Resources Peru and Pesquera Exalmar SAA 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.