Correlation Between Nyrstar NV and Cenergy Holdings

Can any of the company-specific risk be diversified away by investing in both Nyrstar NV and Cenergy Holdings 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 Nyrstar NV and Cenergy Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nyrstar NV and Cenergy Holdings SA, you can compare the effects of market volatilities on Nyrstar NV and Cenergy Holdings 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 Nyrstar NV with a short position of Cenergy Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nyrstar NV and Cenergy Holdings.

Diversification Opportunities for Nyrstar NV and Cenergy Holdings

-0.61

Correlation Coefficient

Nyrstar NV  Cenergy Holdings

Excellent diversification

The 3 months correlation between Nyrstar and Cenergy is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Nyrstar NV and Cenergy Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenergy Holdings and Nyrstar NV 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 Nyrstar NV are associated (or correlated) with Cenergy Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenergy Holdings has no effect on the direction of Nyrstar NV i.e., Nyrstar NV and Cenergy Holdings go up and down completely randomly.

Pair Corralation between Nyrstar NV and Cenergy Holdings

Assuming the 90 days trading horizon Nyrstar NV is expected to generate 4.63 times more return on investment than Cenergy Holdings. However, Nyrstar NV is 4.63 times more volatile than Cenergy Holdings SA. It trades about 0.15 of its potential returns per unit of risk. Cenergy Holdings SA is currently generating about 0.02 per unit of risk. If you would invest  4.36  in Nyrstar NV on September 23, 2024 and sell it today you would earn a total of  2.92  from holding Nyrstar NV or generate 66.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Nyrstar NV  vs.  Cenergy Holdings SA

Nyrstar NV

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nyrstar NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Nyrstar NV reported solid returns over the last few months and may actually be approaching a breakup point.

Cenergy Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cenergy Holdings SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Nyrstar NV and Cenergy Holdings

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

The idea behind Nyrstar NV and Cenergy Holdings SA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..