Correlation Between NEXA RESOURCES and American Lithium
Can any of the company-specific risk be diversified away by investing in both NEXA RESOURCES and American Lithium 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 American Lithium 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 American Lithium Corp, you can compare the effects of market volatilities on NEXA RESOURCES and American Lithium 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 American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXA RESOURCES and American Lithium.
Diversification Opportunities for NEXA RESOURCES and American Lithium
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between NEXA and American is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding NEXA RESOURCES SA and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp 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 American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of NEXA RESOURCES i.e., NEXA RESOURCES and American Lithium go up and down completely randomly.
Pair Corralation between NEXA RESOURCES and American Lithium
Assuming the 90 days horizon NEXA RESOURCES SA is expected to generate 0.25 times more return on investment than American Lithium. However, NEXA RESOURCES SA is 4.01 times less risky than American Lithium. It trades about 0.18 of its potential returns per unit of risk. American Lithium Corp is currently generating about 0.04 per unit of risk. If you would invest 590.00 in NEXA RESOURCES SA on September 24, 2024 and sell it today you would earn a total of 175.00 from holding NEXA RESOURCES SA or generate 29.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
NEXA RESOURCES SA vs. American Lithium Corp
Performance |
Timeline |
NEXA RESOURCES SA |
American Lithium Corp |
NEXA RESOURCES and American Lithium Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NEXA RESOURCES and American Lithium
The main advantage of trading using opposite NEXA RESOURCES and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXA RESOURCES position performs unexpectedly, American Lithium 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 American Lithium will offset losses from the drop in American Lithium's long position.NEXA RESOURCES vs. Rio Tinto Group | NEXA RESOURCES vs. Anglo American plc | NEXA RESOURCES vs. Liontown Resources Limited | NEXA RESOURCES vs. STRAITS TRADG SD |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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