Correlation Between Coty and Hims Hers
Can any of the company-specific risk be diversified away by investing in both Coty and Hims Hers 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 Coty and Hims Hers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coty Inc and Hims Hers Health, you can compare the effects of market volatilities on Coty and Hims Hers 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 Coty with a short position of Hims Hers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coty and Hims Hers.
Diversification Opportunities for Coty and Hims Hers
Pay attention - limited upside
The 3 months correlation between Coty and Hims is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Coty Inc and Hims Hers Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hims Hers Health and Coty 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 Coty Inc are associated (or correlated) with Hims Hers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hims Hers Health has no effect on the direction of Coty i.e., Coty and Hims Hers go up and down completely randomly.
Pair Corralation between Coty and Hims Hers
Given the investment horizon of 90 days Coty Inc is expected to under-perform the Hims Hers. But the stock apears to be less risky and, when comparing its historical volatility, Coty Inc is 5.41 times less risky than Hims Hers. The stock trades about -0.03 of its potential returns per unit of risk. The Hims Hers Health is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,308 in Hims Hers Health on August 28, 2024 and sell it today you would earn a total of 827.00 from holding Hims Hers Health or generate 35.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coty Inc vs. Hims Hers Health
Performance |
| Timeline |
| Coty Inc |
| Hims Hers Health |
Coty and Hims Hers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coty and Hims Hers
The main advantage of trading using opposite Coty and Hims Hers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coty position performs unexpectedly, Hims Hers 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 Hims Hers will offset losses from the drop in Hims Hers' long position.The idea behind Coty Inc and Hims Hers Health 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.| Hims Hers vs. ELF Beauty | Hims Hers vs. Newell Brands | Hims Hers vs. Virgin Group Acquisition | Hims Hers vs. Estee Lauder Companies |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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