Correlation Between NEXA RESOURCES and NISSIN FOODS

Can any of the company-specific risk be diversified away by investing in both NEXA RESOURCES and NISSIN FOODS 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 NISSIN FOODS 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 NISSIN FOODS HLDGS, you can compare the effects of market volatilities on NEXA RESOURCES and NISSIN FOODS 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 NISSIN FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXA RESOURCES and NISSIN FOODS.

Diversification Opportunities for NEXA RESOURCES and NISSIN FOODS

-0.16

Correlation Coefficient

NEXA RESOURCES  NISSIN FOODS

Good diversification

The 3 months correlation between NEXA and NISSIN is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding NEXA RESOURCES SA and NISSIN FOODS HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSIN FOODS HLDGS 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 NISSIN FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSIN FOODS HLDGS has no effect on the direction of NEXA RESOURCES i.e., NEXA RESOURCES and NISSIN FOODS go up and down completely randomly.

Pair Corralation between NEXA RESOURCES and NISSIN FOODS

Assuming the 90 days horizon NEXA RESOURCES SA is expected to generate 1.25 times more return on investment than NISSIN FOODS. However, NEXA RESOURCES is 1.25 times more volatile than NISSIN FOODS HLDGS. It trades about 0.21 of its potential returns per unit of risk. NISSIN FOODS HLDGS is currently generating about 0.02 per unit of risk. If you would invest  540.00  in NEXA RESOURCES SA on September 12, 2024 and sell it today you would earn a total of  180.00  from holding NEXA RESOURCES SA or generate 33.33% 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.  NISSIN FOODS HLDGS

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 uncertain basic indicators, NEXA RESOURCES reported solid returns over the last few months and may actually be approaching a breakup point.

NISSIN FOODS HLDGS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NISSIN FOODS HLDGS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, NISSIN FOODS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NEXA RESOURCES and NISSIN FOODS

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

The idea behind NEXA RESOURCES SA and NISSIN FOODS HLDGS 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.