Correlation Between Hengan International and Pigeon Corp
Can any of the company-specific risk be diversified away by investing in both Hengan International and Pigeon Corp 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 Pigeon Corp 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 Pigeon Corp ADR, you can compare the effects of market volatilities on Hengan International and Pigeon Corp 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 Pigeon Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengan International and Pigeon Corp.
Diversification Opportunities for Hengan International and Pigeon Corp
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hengan and Pigeon is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hengan International Group and Pigeon Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pigeon Corp ADR 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 Pigeon Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pigeon Corp ADR has no effect on the direction of Hengan International i.e., Hengan International and Pigeon Corp go up and down completely randomly.
Pair Corralation between Hengan International and Pigeon Corp
Assuming the 90 days horizon Hengan International Group is expected to generate 0.64 times more return on investment than Pigeon Corp. However, Hengan International Group is 1.56 times less risky than Pigeon Corp. It trades about -0.08 of its potential returns per unit of risk. Pigeon Corp ADR is currently generating about -0.19 per unit of risk. If you would invest 1,489 in Hengan International Group on September 2, 2024 and sell it today you would lose (48.00) from holding Hengan International Group or give up 3.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hengan International Group vs. Pigeon Corp ADR
Performance |
| Timeline |
| Hengan International |
| Pigeon Corp ADR |
Hengan International and Pigeon Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hengan International and Pigeon Corp
The main advantage of trading using opposite Hengan International and Pigeon Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hengan International position performs unexpectedly, Pigeon Corp 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 Pigeon Corp will offset losses from the drop in Pigeon Corp's long position.| Hengan International vs. European Wax Center | Hengan International vs. Edgewell Personal Care | Hengan International vs. Inter Parfums | Hengan International vs. Mannatech Incorporated |
| Pigeon Corp vs. Unicharm Corp | Pigeon Corp vs. Hengan International Group | Pigeon Corp vs. Virgin Group Acquisition | Pigeon Corp vs. Honest Company |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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