Correlation Between Nexa Resources and Southern Copper

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

By analyzing existing cross correlation between Nexa Resources Peru and Southern Copper Corp, you can compare the effects of market volatilities on Nexa Resources and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexa Resources and Southern Copper.

Diversification Opportunities for Nexa Resources and Southern Copper

-0.29

Correlation Coefficient

Nexa Resources  Southern Copper

Very good diversification

The 3 months correlation between Nexa and Southern is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Nexa Resources Peru and Southern Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper Corp 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 Peru are associated (or correlated) with Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper Corp has no effect on the direction of Nexa Resources i.e., Nexa Resources and Southern Copper go up and down completely randomly.

Pair Corralation between Nexa Resources and Southern Copper

Assuming the 90 days trading horizon Nexa Resources is expected to generate 1.17 times less return on investment than Southern Copper. But when comparing it to its historical volatility, Nexa Resources Peru is 2.02 times less risky than Southern Copper. It trades about 0.08 of its potential returns per unit of risk. Southern Copper Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,437  in Southern Copper Corp on April 25, 2025 and sell it today you would earn a total of  436.00  from holding Southern Copper Corp or generate 4.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.55%
Values	Daily Returns

Nexa Resources Peru  vs.  Southern Copper Corp

Nexa Resources Peru

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nexa Resources Peru are ranked lower than 6 (%) 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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Southern Copper Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Copper Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Southern Copper may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Nexa Resources and Southern Copper

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

The idea behind Nexa Resources Peru and Southern Copper Corp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.