Correlation Between Nestle Bhd and Kawan Food
Can any of the company-specific risk be diversified away by investing in both Nestle Bhd and Kawan Food 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 Bhd and Kawan Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nestle Bhd and Kawan Food Bhd, you can compare the effects of market volatilities on Nestle Bhd and Kawan Food 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 Bhd with a short position of Kawan Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestle Bhd and Kawan Food.
Diversification Opportunities for Nestle Bhd and Kawan Food
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nestle and Kawan is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nestle Bhd and Kawan Food Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kawan Food Bhd and Nestle Bhd 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 Bhd are associated (or correlated) with Kawan Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kawan Food Bhd has no effect on the direction of Nestle Bhd i.e., Nestle Bhd and Kawan Food go up and down completely randomly.
Pair Corralation between Nestle Bhd and Kawan Food
Assuming the 90 days trading horizon Nestle Bhd is expected to under-perform the Kawan Food. But the stock apears to be less risky and, when comparing its historical volatility, Nestle Bhd is 1.56 times less risky than Kawan Food. The stock trades about -0.08 of its potential returns per unit of risk. The Kawan Food Bhd is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 214.00 in Kawan Food Bhd on November 5, 2024 and sell it today you would lose (57.00) from holding Kawan Food Bhd or give up 26.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Nestle Bhd vs. Kawan Food Bhd
Performance |
| Timeline |
| Nestle Bhd |
| Kawan Food Bhd |
Nestle Bhd and Kawan Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nestle Bhd and Kawan Food
The main advantage of trading using opposite Nestle Bhd and Kawan Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestle Bhd position performs unexpectedly, Kawan Food 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 Kawan Food will offset losses from the drop in Kawan Food's long position.| Nestle Bhd vs. IHH Healthcare Bhd | Nestle Bhd vs. Hong Leong Bank | Nestle Bhd vs. RHB Bank Bhd | Nestle Bhd vs. Apollo Food Holdings |
| Kawan Food vs. Petronas Chemicals Group | Kawan Food vs. Al Aqar Healthcare | Kawan Food vs. Greatech Technology Bhd | Kawan Food vs. Nova Wellness Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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