Correlation Between Hengan International and Henkel AG
Can any of the company-specific risk be diversified away by investing in both Hengan International and Henkel AG 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 Henkel AG 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 Henkel AG Co, you can compare the effects of market volatilities on Hengan International and Henkel AG 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 Henkel AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengan International and Henkel AG.
Diversification Opportunities for Hengan International and Henkel AG
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hengan and Henkel is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hengan International Group and Henkel AG Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henkel AG 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 Henkel AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henkel AG has no effect on the direction of Hengan International i.e., Hengan International and Henkel AG go up and down completely randomly.
Pair Corralation between Hengan International and Henkel AG
Assuming the 90 days horizon Hengan International Group is expected to under-perform the Henkel AG. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hengan International Group is 1.01 times less risky than Henkel AG. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Henkel AG Co is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 1,953 in Henkel AG Co on September 4, 2024 and sell it today you would lose (56.00) from holding Henkel AG Co or give up 2.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Hengan International Group vs. Henkel AG Co
Performance |
| Timeline |
| Hengan International |
| Henkel AG |
Hengan International and Henkel AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hengan International and Henkel AG
The main advantage of trading using opposite Hengan International and Henkel AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hengan International position performs unexpectedly, Henkel AG 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 Henkel AG will offset losses from the drop in Henkel AG'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 |
| Henkel AG vs. LOral SA | Henkel AG vs. LOreal Co ADR | Henkel AG vs. Unilever PLC ADR | Henkel AG vs. Kimberly Clark |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |