Correlation Between Bharatiya Global and Nestle India

Can any of the company-specific risk be diversified away by investing in both Bharatiya Global and Nestle India 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 Bharatiya Global and Nestle India into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bharatiya Global Infomedia and Nestle India Limited, you can compare the effects of market volatilities on Bharatiya Global and Nestle India 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 Bharatiya Global with a short position of Nestle India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bharatiya Global and Nestle India.

Diversification Opportunities for Bharatiya Global and Nestle India

-0.59

Correlation Coefficient

Bharatiya Global  Nestle India

Excellent diversification

The 3 months correlation between Bharatiya and Nestle is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bharatiya Global Infomedia and Nestle India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestle India Limited and Bharatiya Global 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 Bharatiya Global Infomedia are associated (or correlated) with Nestle India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestle India Limited has no effect on the direction of Bharatiya Global i.e., Bharatiya Global and Nestle India go up and down completely randomly.

Pair Corralation between Bharatiya Global and Nestle India

Assuming the 90 days trading horizon Bharatiya Global Infomedia is expected to generate 1.74 times more return on investment than Nestle India. However, Bharatiya Global is 1.74 times more volatile than Nestle India Limited. It trades about 0.38 of its potential returns per unit of risk. Nestle India Limited is currently generating about -0.21 per unit of risk. If you would invest  309.00  in Bharatiya Global Infomedia on October 7, 2024 and sell it today you would earn a total of  162.00  from holding Bharatiya Global Infomedia or generate 52.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bharatiya Global Infomedia  vs.  Nestle India Limited

Bharatiya Global Inf

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bharatiya Global Infomedia are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental drivers, Bharatiya Global disclosed solid returns over the last few months and may actually be approaching a breakup point.

Nestle India Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nestle India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Bharatiya Global and Nestle India

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

The idea behind Bharatiya Global Infomedia and Nestle India Limited 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.