Correlation Between Binasat Communications and Nestle Bhd
Can any of the company-specific risk be diversified away by investing in both Binasat Communications and Nestle Bhd 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 Binasat Communications and Nestle Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binasat Communications Bhd and Nestle Bhd, you can compare the effects of market volatilities on Binasat Communications and Nestle Bhd 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 Binasat Communications with a short position of Nestle Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binasat Communications and Nestle Bhd.
Diversification Opportunities for Binasat Communications and Nestle Bhd
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Binasat and Nestle is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Binasat Communications Bhd and Nestle Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestle Bhd and Binasat Communications 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 Binasat Communications Bhd are associated (or correlated) with Nestle Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestle Bhd has no effect on the direction of Binasat Communications i.e., Binasat Communications and Nestle Bhd go up and down completely randomly.
Pair Corralation between Binasat Communications and Nestle Bhd
Assuming the 90 days trading horizon Binasat Communications Bhd is expected to generate 3.49 times more return on investment than Nestle Bhd. However, Binasat Communications is 3.49 times more volatile than Nestle Bhd. It trades about -0.11 of its potential returns per unit of risk. Nestle Bhd is currently generating about -0.56 per unit of risk. If you would invest 19.00 in Binasat Communications Bhd on November 5, 2024 and sell it today you would lose (1.00) from holding Binasat Communications Bhd or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binasat Communications Bhd vs. Nestle Bhd
Performance |
| Timeline |
| Binasat Communications |
| Nestle Bhd |
Binasat Communications and Nestle Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binasat Communications and Nestle Bhd
The main advantage of trading using opposite Binasat Communications and Nestle Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binasat Communications position performs unexpectedly, Nestle Bhd 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 Nestle Bhd will offset losses from the drop in Nestle Bhd's long position.| Binasat Communications vs. Uchi Technologies Bhd | Binasat Communications vs. MI Technovation Bhd | Binasat Communications vs. Pantech Group Holdings | Binasat Communications vs. Kluang Rubber |
| Nestle Bhd vs. Binasat Communications Bhd | Nestle Bhd vs. Oriental Food Industries | Nestle Bhd vs. Sports Toto Berhad | Nestle Bhd vs. Riverview Rubber Estates |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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