Correlation Between AGRICULTBK HADR25 and NEXA RESOURCES

Can any of the company-specific risk be diversified away by investing in both AGRICULTBK HADR25 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 AGRICULTBK HADR25 and NEXA RESOURCES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AGRICULTBK HADR25 YC and NEXA RESOURCES SA, you can compare the effects of market volatilities on AGRICULTBK HADR25 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 AGRICULTBK HADR25 with a short position of NEXA RESOURCES. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICULTBK HADR25 and NEXA RESOURCES.

Diversification Opportunities for AGRICULTBK HADR25 and NEXA RESOURCES

0.91

Correlation Coefficient

AGRICULTBK HADR25  NEXA RESOURCES

Almost no diversification

The 3 months correlation between AGRICULTBK and NEXA is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding AGRICULTBK HADR25 YC and NEXA RESOURCES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXA RESOURCES SA and AGRICULTBK HADR25 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 AGRICULTBK HADR25 YC 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 SA has no effect on the direction of AGRICULTBK HADR25 i.e., AGRICULTBK HADR25 and NEXA RESOURCES go up and down completely randomly.

Pair Corralation between AGRICULTBK HADR25 and NEXA RESOURCES

Assuming the 90 days trading horizon AGRICULTBK HADR25 is expected to generate 1.12 times less return on investment than NEXA RESOURCES. But when comparing it to its historical volatility, AGRICULTBK HADR25 YC is 1.04 times less risky than NEXA RESOURCES. It trades about 0.2 of its potential returns per unit of risk. NEXA RESOURCES SA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  565.00  in NEXA RESOURCES SA on September 13, 2024 and sell it today you would earn a total of  190.00  from holding NEXA RESOURCES SA or generate 33.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

AGRICULTBK HADR25 YC  vs.  NEXA RESOURCES SA

AGRICULTBK HADR25

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGRICULTBK HADR25 YC are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AGRICULTBK HADR25 reported solid returns over the last few months and may actually be approaching a breakup point.

NEXA RESOURCES SA

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NEXA RESOURCES SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NEXA RESOURCES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AGRICULTBK HADR25 and NEXA RESOURCES

The main advantage of trading using opposite AGRICULTBK HADR25 and NEXA RESOURCES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICULTBK HADR25 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's long position.

The idea behind AGRICULTBK HADR25 YC and NEXA RESOURCES SA 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.