Correlation Between Hengan International and Virgin Group
Can any of the company-specific risk be diversified away by investing in both Hengan International and Virgin Group 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 Hengan International and Virgin Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hengan International Group and Virgin Group Acquisition, you can compare the effects of market volatilities on Hengan International and Virgin Group 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 Hengan International with a short position of Virgin Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengan International and Virgin Group.
Diversification Opportunities for Hengan International and Virgin Group
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hengan and Virgin is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Hengan International Group and Virgin Group Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Group Acquisition and Hengan International 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 Hengan International Group are associated (or correlated) with Virgin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Group Acquisition has no effect on the direction of Hengan International i.e., Hengan International and Virgin Group go up and down completely randomly.
Pair Corralation between Hengan International and Virgin Group
Assuming the 90 days horizon Hengan International Group is expected to under-perform the Virgin Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hengan International Group is 1.91 times less risky than Virgin Group. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Virgin Group Acquisition is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 161.00 in Virgin Group Acquisition on September 3, 2024 and sell it today you would lose (6.00) from holding Virgin Group Acquisition or give up 3.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hengan International Group vs. Virgin Group Acquisition
Performance |
| Timeline |
| Hengan International |
| Virgin Group Acquisition |
Hengan International and Virgin Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hengan International and Virgin Group
The main advantage of trading using opposite Hengan International and Virgin Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hengan International position performs unexpectedly, Virgin Group 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 Virgin Group will offset losses from the drop in Virgin Group's long position.| Hengan International vs. LOral SA | Hengan International vs. LOreal Co ADR | Hengan International vs. Unilever PLC ADR | Hengan International vs. Kimberly Clark |
| Virgin Group vs. Mannatech Incorporated | Virgin Group vs. Edgewell Personal Care | Virgin Group vs. Inter Parfums | Virgin Group vs. Nu Skin Enterprises |
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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