Correlation Between Nestle SA and Want Want

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Can any of the company-specific risk be diversified away by investing in both Nestle SA and Want Want 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 Want Want into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nestle SA and Want Want China, you can compare the effects of market volatilities on Nestle SA and Want Want 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 Want Want. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestle SA and Want Want.

Diversification Opportunities for Nestle SA and Want Want

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Nestle and Want is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nestle SA and Want Want China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Want Want China 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 Want Want. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Want Want China has no effect on the direction of Nestle SA i.e., Nestle SA and Want Want go up and down completely randomly.

Pair Corralation between Nestle SA and Want Want

If you would invest  55.00  in Want Want China on December 29, 2023 and sell it today you would earn a total of  0.00  from holding Want Want China or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

Nestle SA  vs.  Want Want China

 Performance 
       Timeline  
Nestle SA 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Nestle SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Want Want China 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Want Want China has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Nestle SA and Want Want Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nestle SA and Want Want

The main advantage of trading using opposite Nestle SA and Want Want positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestle SA position performs unexpectedly, Want Want 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 Want Want will offset losses from the drop in Want Want's long position.
The idea behind Nestle SA and Want Want China 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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