Correlation Between Implenia and Nestl SA

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

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

Diversification Opportunities for Implenia and Nestl SA

-0.7

Correlation Coefficient

Implenia  Nestl SA

Excellent diversification

The 3 months correlation between Implenia and Nestl is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Implenia AG and Nestl SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestl SA and Implenia 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 Implenia AG are associated (or correlated) with Nestl SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestl SA has no effect on the direction of Implenia i.e., Implenia and Nestl SA go up and down completely randomly.

Pair Corralation between Implenia and Nestl SA

Assuming the 90 days trading horizon Implenia AG is expected to generate 2.34 times more return on investment than Nestl SA. However, Implenia is 2.34 times more volatile than Nestl SA. It trades about 0.14 of its potential returns per unit of risk. Nestl SA is currently generating about -0.23 per unit of risk. If you would invest  4,485  in Implenia AG on April 24, 2025 and sell it today you would earn a total of  765.00  from holding Implenia AG or generate 17.06% return on investment over 90 days.

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

Implenia AG  vs.  Nestl SA

Implenia AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Implenia AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Implenia showed solid returns over the last few months and may actually be approaching a breakup point.

Nestl SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nestl SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Implenia and Nestl SA

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

The idea behind Implenia AG 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 Transaction History module to view history of all your transactions and understand their impact on performance.