Correlation Between Nestl SA and CPH Chemie

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

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

Diversification Opportunities for Nestl SA and CPH Chemie

-0.8

Correlation Coefficient

Nestl SA  CPH Chemie

Pay attention - limited upside

The 3 months correlation between Nestl and CPH is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nestl SA and CPH Chemie und in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPH Chemie und and Nestl SA 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 Nestl SA are associated (or correlated) with CPH Chemie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPH Chemie und has no effect on the direction of Nestl SA i.e., Nestl SA and CPH Chemie go up and down completely randomly.

Pair Corralation between Nestl SA and CPH Chemie

Assuming the 90 days trading horizon Nestl SA is expected to under-perform the CPH Chemie. But the stock apears to be less risky and, when comparing its historical volatility, Nestl SA is 1.83 times less risky than CPH Chemie. The stock trades about -0.22 of its potential returns per unit of risk. The CPH Chemie und is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  6,560  in CPH Chemie und on April 24, 2025 and sell it today you would earn a total of  940.00  from holding CPH Chemie und or generate 14.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Nestl SA  vs.  CPH Chemie und

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.

CPH Chemie und

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CPH Chemie und are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, CPH Chemie showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nestl SA and CPH Chemie

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

The idea behind Nestl SA and CPH Chemie und 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.