Correlation Between Nestle India and Bharatiya Global

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

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

Diversification Opportunities for Nestle India and Bharatiya Global

-0.59

Correlation Coefficient

Nestle India  Bharatiya Global

Excellent diversification

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

Pair Corralation between Nestle India and Bharatiya Global

Assuming the 90 days trading horizon Nestle India Limited is expected to under-perform the Bharatiya Global. But the stock apears to be less risky and, when comparing its historical volatility, Nestle India Limited is 1.73 times less risky than Bharatiya Global. The stock trades about -0.12 of its potential returns per unit of risk. The Bharatiya Global Infomedia is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  320.00  in Bharatiya Global Infomedia on October 7, 2024 and sell it today you would earn a total of  151.00  from holding Bharatiya Global Infomedia or generate 47.19% return on investment over 90 days.

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

Nestle India Limited  vs.  Bharatiya Global Infomedia

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.

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.

Pair Trading with Nestle India and Bharatiya Global

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

The idea behind Nestle India Limited and Bharatiya Global Infomedia 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.