Correlation Between ANTA SPORTS and Nestlé SA

Can any of the company-specific risk be diversified away by investing in both ANTA SPORTS and Nestlé SA 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 ANTA SPORTS and Nestlé SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ANTA SPORTS PRODUCT and Nestl SA, you can compare the effects of market volatilities on ANTA SPORTS and Nestlé SA 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 ANTA SPORTS with a short position of Nestlé SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANTA SPORTS and Nestlé SA.

Diversification Opportunities for ANTA SPORTS and Nestlé SA

0.63

Correlation Coefficient

ANTA SPORTS  Nestlé SA

Poor diversification

The 3 months correlation between ANTA and Nestlé is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ANTA SPORTS PRODUCT and Nestl SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestlé SA and ANTA SPORTS 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 ANTA SPORTS PRODUCT are associated (or correlated) with Nestlé SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestlé SA has no effect on the direction of ANTA SPORTS i.e., ANTA SPORTS and Nestlé SA go up and down completely randomly.

Pair Corralation between ANTA SPORTS and Nestlé SA

Assuming the 90 days trading horizon ANTA SPORTS PRODUCT is expected to under-perform the Nestlé SA. In addition to that, ANTA SPORTS is 1.93 times more volatile than Nestl SA. It trades about -0.32 of its total potential returns per unit of risk. Nestl SA is currently generating about -0.1 per unit of volatility. If you would invest  8,160  in Nestl SA on October 9, 2024 and sell it today you would lose (160.00) from holding Nestl SA or give up 1.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ANTA SPORTS PRODUCT  vs.  Nestl SA

ANTA SPORTS PRODUCT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANTA SPORTS PRODUCT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nestlé SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nestl SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ANTA SPORTS and Nestlé SA

The main advantage of trading using opposite ANTA SPORTS and Nestlé SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANTA SPORTS position performs unexpectedly, Nestlé SA 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 Nestlé SA will offset losses from the drop in Nestlé SA's long position.

The idea behind ANTA SPORTS PRODUCT and Nestl SA 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.