Correlation Between Nexa Resources and Skeena Resources

Can any of the company-specific risk be diversified away by investing in both Nexa Resources and Skeena 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 Nexa Resources and Skeena Resources 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 Skeena Resources, you can compare the effects of market volatilities on Nexa Resources and Skeena 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 Nexa Resources with a short position of Skeena Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexa Resources and Skeena Resources.

Diversification Opportunities for Nexa Resources and Skeena Resources

0.68

Correlation Coefficient

Nexa Resources  Skeena Resources

Poor diversification

The 3 months correlation between Nexa and Skeena is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nexa Resources SA and Skeena Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skeena Resources 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 Skeena Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skeena Resources has no effect on the direction of Nexa Resources i.e., Nexa Resources and Skeena Resources go up and down completely randomly.

Pair Corralation between Nexa Resources and Skeena Resources

Given the investment horizon of 90 days Nexa Resources SA is expected to generate 0.65 times more return on investment than Skeena Resources. However, Nexa Resources SA is 1.55 times less risky than Skeena Resources. It trades about 0.19 of its potential returns per unit of risk. Skeena Resources is currently generating about 0.12 per unit of risk. If you would invest  598.00  in Nexa Resources SA on September 3, 2024 and sell it today you would earn a total of  161.00  from holding Nexa Resources SA or generate 26.92% 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.  Skeena Resources

Nexa Resources SA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nexa Resources SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Nexa Resources sustained solid returns over the last few months and may actually be approaching a breakup point.

Skeena Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Skeena Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward-looking signals, Skeena Resources exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexa Resources and Skeena Resources

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

The idea behind Nexa Resources SA and Skeena Resources 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.