Correlation Between Nexa Resources and Largo Physical

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

Diversification Opportunities for Nexa Resources and Largo Physical

-0.88

Correlation Coefficient

Nexa Resources  Largo Physical

Pay attention - limited upside

The 3 months correlation between Nexa and Largo is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nexa Resources SA and Largo Physical Vanadium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Largo Physical Vanadium 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 Largo Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Largo Physical Vanadium has no effect on the direction of Nexa Resources i.e., Nexa Resources and Largo Physical go up and down completely randomly.

Pair Corralation between Nexa Resources and Largo Physical

If you would invest  769.00  in Nexa Resources SA on September 4, 2024 and sell it today you would earn a total of  10.00  from holding Nexa Resources SA or generate 1.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Nexa Resources SA  vs.  Largo Physical Vanadium

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 fragile basic indicators, Nexa Resources sustained solid returns over the last few months and may actually be approaching a breakup point.

Largo Physical Vanadium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Largo Physical Vanadium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Largo Physical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nexa Resources and Largo Physical

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

The idea behind Nexa Resources SA and Largo Physical Vanadium 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.