Correlation Between NEXA RESOURCES and REGAL ASIAN

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

By analyzing existing cross correlation between NEXA RESOURCES SA and REGAL ASIAN INVESTMENTS, you can compare the effects of market volatilities on NEXA RESOURCES and REGAL ASIAN 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 REGAL ASIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXA RESOURCES and REGAL ASIAN.

Diversification Opportunities for NEXA RESOURCES and REGAL ASIAN

0.63

Correlation Coefficient

NEXA RESOURCES  REGAL ASIAN

Poor diversification

The 3 months correlation between NEXA and REGAL is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding NEXA RESOURCES SA and REGAL ASIAN INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL ASIAN INVESTMENTS 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 SA are associated (or correlated) with REGAL ASIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL ASIAN INVESTMENTS has no effect on the direction of NEXA RESOURCES i.e., NEXA RESOURCES and REGAL ASIAN go up and down completely randomly.

Pair Corralation between NEXA RESOURCES and REGAL ASIAN

Assuming the 90 days horizon NEXA RESOURCES SA is expected to generate 1.18 times more return on investment than REGAL ASIAN. However, NEXA RESOURCES is 1.18 times more volatile than REGAL ASIAN INVESTMENTS. It trades about 0.17 of its potential returns per unit of risk. REGAL ASIAN INVESTMENTS is currently generating about -0.38 per unit of risk. If you would invest  710.00  in NEXA RESOURCES SA on September 13, 2024 and sell it today you would earn a total of  45.00  from holding NEXA RESOURCES SA or generate 6.34% return on investment over 90 days.

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

NEXA RESOURCES SA  vs.  REGAL ASIAN INVESTMENTS

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.

REGAL ASIAN INVESTMENTS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in REGAL ASIAN INVESTMENTS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, REGAL ASIAN may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NEXA RESOURCES and REGAL ASIAN

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

The idea behind NEXA RESOURCES SA and REGAL ASIAN INVESTMENTS 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.