Correlation Between NEXA RESOURCES and Peel Mining

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

Diversification Opportunities for NEXA RESOURCES and Peel Mining

0.74

Correlation Coefficient

NEXA RESOURCES  Peel Mining

Poor diversification

The 3 months correlation between NEXA and Peel is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NEXA RESOURCES SA and Peel Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peel Mining Limited 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 Peel Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peel Mining Limited has no effect on the direction of NEXA RESOURCES i.e., NEXA RESOURCES and Peel Mining go up and down completely randomly.

Pair Corralation between NEXA RESOURCES and Peel Mining

Assuming the 90 days horizon NEXA RESOURCES SA is expected to generate 0.78 times more return on investment than Peel Mining. However, NEXA RESOURCES SA is 1.29 times less risky than Peel Mining. It trades about 0.13 of its potential returns per unit of risk. Peel Mining Limited is currently generating about 0.07 per unit of risk. If you would invest  705.00  in NEXA RESOURCES SA on September 22, 2024 and sell it today you would earn a total of  45.00  from holding NEXA RESOURCES SA or generate 6.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

NEXA RESOURCES SA  vs.  Peel Mining Limited

NEXA RESOURCES SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NEXA RESOURCES SA are ranked lower than 12 (%) 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.

Peel Mining Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Peel Mining Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Peel Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NEXA RESOURCES and Peel Mining

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

The idea behind NEXA RESOURCES SA and Peel Mining Limited 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.