Correlation Between Cosmos Technology and Nestle Bhd
Can any of the company-specific risk be diversified away by investing in both Cosmos Technology 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 Cosmos Technology and Nestle Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosmos Technology International and Nestle Bhd, you can compare the effects of market volatilities on Cosmos Technology 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 Cosmos Technology with a short position of Nestle Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmos Technology and Nestle Bhd.
Diversification Opportunities for Cosmos Technology and Nestle Bhd
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cosmos and Nestle is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos Technology Internationa and Nestle Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestle Bhd and Cosmos Technology 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 Cosmos Technology International 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 Cosmos Technology i.e., Cosmos Technology and Nestle Bhd go up and down completely randomly.
Pair Corralation between Cosmos Technology and Nestle Bhd
Assuming the 90 days trading horizon Cosmos Technology International is expected to under-perform the Nestle Bhd. In addition to that, Cosmos Technology is 3.47 times more volatile than Nestle Bhd. It trades about -0.17 of its total potential returns per unit of risk. Nestle Bhd is currently generating about -0.56 per unit of volatility. If you would invest 9,648 in Nestle Bhd on November 5, 2024 and sell it today you would lose (650.00) from holding Nestle Bhd or give up 6.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Cosmos Technology Internationa vs. Nestle Bhd
Performance |
| Timeline |
| Cosmos Technology |
| Nestle Bhd |
Cosmos Technology and Nestle Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosmos Technology and Nestle Bhd
The main advantage of trading using opposite Cosmos Technology and Nestle Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmos Technology 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.| Cosmos Technology vs. Public Bank Bhd | Cosmos Technology vs. Tex Cycle Technology | Cosmos Technology vs. Aeon Credit Service | Cosmos Technology vs. Greatech Technology Bhd |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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