Correlation Between Nestl SA and Meyer Burger

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

By analyzing existing cross correlation between Nestl SA and Meyer Burger Tech, you can compare the effects of market volatilities on Nestl SA and Meyer Burger 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 Meyer Burger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestl SA and Meyer Burger.

Diversification Opportunities for Nestl SA and Meyer Burger

0.76

Correlation Coefficient

Nestl SA  Meyer Burger

Poor diversification

The 3 months correlation between Nestl and Meyer is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nestl SA and Meyer Burger Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meyer Burger Tech 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 Meyer Burger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meyer Burger Tech has no effect on the direction of Nestl SA i.e., Nestl SA and Meyer Burger go up and down completely randomly.

Pair Corralation between Nestl SA and Meyer Burger

Assuming the 90 days trading horizon Nestl SA is expected to generate 0.1 times more return on investment than Meyer Burger. However, Nestl SA is 10.32 times less risky than Meyer Burger. It trades about -0.22 of its potential returns per unit of risk. Meyer Burger Tech is currently generating about -0.09 per unit of risk. If you would invest  8,744  in Nestl SA on April 24, 2025 and sell it today you would lose (993.00) from holding Nestl SA or give up 11.36% of portfolio value over 90 days.

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

Nestl SA  vs.  Meyer Burger Tech

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.

Meyer Burger Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Meyer Burger Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in August 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Nestl SA and Meyer Burger

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

The idea behind Nestl SA and Meyer Burger Tech 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.