Correlation Between Union De and Nexa Resources

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

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

Diversification Opportunities for Union De and Nexa Resources

-0.17

Correlation Coefficient

Union De  Nexa Resources

Good diversification

The 3 months correlation between Union and Nexa is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Union de Cervecerias and Nexa Resources Peru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexa Resources Peru and Union De 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 Union de Cervecerias 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 Peru has no effect on the direction of Union De i.e., Union De and Nexa Resources go up and down completely randomly.

Pair Corralation between Union De and Nexa Resources

Assuming the 90 days trading horizon Union de Cervecerias is expected to under-perform the Nexa Resources. But the stock apears to be less risky and, when comparing its historical volatility, Union de Cervecerias is 1.04 times less risky than Nexa Resources. The stock trades about -0.03 of its potential returns per unit of risk. The Nexa Resources Peru is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  128.00  in Nexa Resources Peru on May 1, 2025 and sell it today you would earn a total of  2.00  from holding Nexa Resources Peru or generate 1.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

Union de Cervecerias  vs.  Nexa Resources Peru

Union de Cervecerias

Risk-Adjusted Performance

Very Weak

Over the last 90 days Union de Cervecerias has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Union De is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Nexa Resources Peru

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nexa Resources Peru are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Nexa Resources is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Union De and Nexa Resources

The main advantage of trading using opposite Union De and Nexa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union De 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 Union de Cervecerias and Nexa Resources Peru 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.