Correlation Between Banco De and Nexa Resources

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

Diversification Opportunities for Banco De and Nexa Resources

-0.15

Correlation Coefficient

Banco De  Nexa Resources

Good diversification

The 3 months correlation between Banco and Nexa is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Banco de Credito 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 Banco 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 Banco de Credito 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 Banco De i.e., Banco De and Nexa Resources go up and down completely randomly.

Pair Corralation between Banco De and Nexa Resources

Assuming the 90 days trading horizon Banco de Credito is expected to generate 3.59 times more return on investment than Nexa Resources. However, Banco De is 3.59 times more volatile than Nexa Resources Peru. It trades about 0.05 of its potential returns per unit of risk. Nexa Resources Peru is currently generating about 0.0 per unit of risk. If you would invest  430.00  in Banco de Credito on May 4, 2025 and sell it today you would earn a total of  30.00  from holding Banco de Credito or generate 6.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.55%
Values	Daily Returns

Banco de Credito  vs.  Nexa Resources Peru

Banco de Credito

Risk-Adjusted Performance

Insignificant

Over the last 90 days Banco de Credito has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Banco De may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Nexa Resources Peru

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexa Resources Peru has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Banco De and Nexa Resources

The main advantage of trading using opposite Banco De and Nexa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco 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 Banco de Credito 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.