Correlation Between TMC The and Nexa Resources

Can any of the company-specific risk be diversified away by investing in both TMC The and Nexa 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 TMC The and Nexa Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TMC the metals and Nexa Resources SA, you can compare the effects of market volatilities on TMC The and Nexa 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 TMC The with a short position of Nexa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMC The and Nexa Resources.

Diversification Opportunities for TMC The and Nexa Resources

-0.49

Correlation Coefficient

TMC The  Nexa Resources

Very good diversification

The 3 months correlation between TMC and Nexa is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding TMC the metals and Nexa Resources SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexa Resources SA and TMC The 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 TMC the metals are associated (or correlated) with Nexa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexa Resources SA has no effect on the direction of TMC The i.e., TMC The and Nexa Resources go up and down completely randomly.

Pair Corralation between TMC The and Nexa Resources

Assuming the 90 days horizon TMC the metals is expected to under-perform the Nexa Resources. In addition to that, TMC The is 5.28 times more volatile than Nexa Resources SA. It trades about -0.02 of its total potential returns per unit of risk. Nexa Resources SA is currently generating about -0.01 per unit of volatility. If you would invest  795.00  in Nexa Resources SA on September 3, 2024 and sell it today you would lose (36.00) from holding Nexa Resources SA or give up 4.53% of portfolio value over 90 days.

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

TMC the metals  vs.  Nexa Resources SA

TMC the metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TMC the metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, TMC The showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with TMC The and Nexa Resources

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

The idea behind TMC the metals and Nexa Resources 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.