Correlation Between Church Dwight and Hengan International
Can any of the company-specific risk be diversified away by investing in both Church Dwight and Hengan International 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 Church Dwight and Hengan International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Church Dwight and Hengan International Group, you can compare the effects of market volatilities on Church Dwight and Hengan International 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 Church Dwight with a short position of Hengan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Church Dwight and Hengan International.
Diversification Opportunities for Church Dwight and Hengan International
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Church and Hengan is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Church Dwight and Hengan International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengan International and Church Dwight 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 Church Dwight are associated (or correlated) with Hengan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengan International has no effect on the direction of Church Dwight i.e., Church Dwight and Hengan International go up and down completely randomly.
Pair Corralation between Church Dwight and Hengan International
Considering the 90-day investment horizon Church Dwight is expected to generate 0.55 times more return on investment than Hengan International. However, Church Dwight is 1.83 times less risky than Hengan International. It trades about 0.03 of its potential returns per unit of risk. Hengan International Group is currently generating about -0.04 per unit of risk. If you would invest 10,712 in Church Dwight on September 3, 2024 and sell it today you would earn a total of 301.00 from holding Church Dwight or generate 2.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Church Dwight vs. Hengan International Group
Performance |
| Timeline |
| Church Dwight |
| Hengan International |
Church Dwight and Hengan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Church Dwight and Hengan International
The main advantage of trading using opposite Church Dwight and Hengan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Church Dwight position performs unexpectedly, Hengan International 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 Hengan International will offset losses from the drop in Hengan International's long position.| Church Dwight vs. Highway Holdings Limited | Church Dwight vs. QCR Holdings | Church Dwight vs. Partner Communications | Church Dwight vs. Acumen Pharmaceuticals |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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