Correlation Between Rimac Seguros and Nexa Resources

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

By analyzing existing cross correlation between Rimac Seguros y and Nexa Resources Peru, you can compare the effects of market volatilities on Rimac Seguros and Nexa Resources 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 Rimac Seguros with a short position of Nexa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rimac Seguros and Nexa Resources.

Diversification Opportunities for Rimac Seguros and Nexa Resources

0.14

Correlation Coefficient

Rimac Seguros  Nexa Resources

Average diversification

The 3 months correlation between Rimac and Nexa is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Rimac Seguros y and Nexa Resources Peru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexa Resources Peru and Rimac Seguros 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 Rimac Seguros y are associated (or correlated) with Nexa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexa Resources Peru has no effect on the direction of Rimac Seguros i.e., Rimac Seguros and Nexa Resources go up and down completely randomly.

Pair Corralation between Rimac Seguros and Nexa Resources

Assuming the 90 days trading horizon Rimac Seguros y is expected to generate 0.71 times more return on investment than Nexa Resources. However, Rimac Seguros y is 1.41 times less risky than Nexa Resources. It trades about 0.01 of its potential returns per unit of risk. Nexa Resources Peru is currently generating about -0.05 per unit of risk. If you would invest  95.00  in Rimac Seguros y on December 25, 2024 and sell it today you would earn a total of  0.00  from holding Rimac Seguros y or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	78.79%
Values	Daily Returns

Rimac Seguros y  vs.  Nexa Resources Peru

Rimac Seguros y

Risk-Adjusted Performance

Very Weak

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

Nexa Resources Peru

Risk-Adjusted Performance

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.

Pair Trading with Rimac Seguros and Nexa Resources

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

The idea behind Rimac Seguros y and Nexa Resources Peru 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.