Correlation Between Nestle SA and Lery Seafood
Can any of the company-specific risk be diversified away by investing in both Nestle SA and Lery Seafood 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 Nestle SA and Lery Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nestle SA and Lery Seafood Group, you can compare the effects of market volatilities on Nestle SA and Lery Seafood 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 Nestle SA with a short position of Lery Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestle SA and Lery Seafood.
Diversification Opportunities for Nestle SA and Lery Seafood
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nestle and Lery is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nestle SA and Lery Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lery Seafood Group and Nestle SA 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 Nestle SA are associated (or correlated) with Lery Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lery Seafood Group has no effect on the direction of Nestle SA i.e., Nestle SA and Lery Seafood go up and down completely randomly.
Pair Corralation between Nestle SA and Lery Seafood
Assuming the 90 days horizon Nestle SA is expected to under-perform the Lery Seafood. In addition to that, Nestle SA is 1.24 times more volatile than Lery Seafood Group. It trades about -0.12 of its total potential returns per unit of risk. Lery Seafood Group is currently generating about -0.09 per unit of volatility. If you would invest 438.00 in Lery Seafood Group on January 19, 2024 and sell it today you would lose (8.00) from holding Lery Seafood Group or give up 1.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nestle SA vs. Lery Seafood Group
Performance |
| Timeline |
| Nestle SA |
| Lery Seafood Group |
Nestle SA and Lery Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nestle SA and Lery Seafood
The main advantage of trading using opposite Nestle SA and Lery Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestle SA position performs unexpectedly, Lery Seafood 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 Lery Seafood will offset losses from the drop in Lery Seafood's long position.| Nestle SA vs. Kellanova | Nestle SA vs. Lancaster Colony | Nestle SA vs. The A2 Milk | Nestle SA vs. Altavoz Entertainment |
| Lery Seafood vs. Kellanova | Lery Seafood vs. Lancaster Colony | Lery Seafood vs. The A2 Milk | Lery Seafood vs. Altavoz Entertainment |
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.
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