Correlation Between Henkel AG and Beiersdorf
Can any of the company-specific risk be diversified away by investing in both Henkel AG and Beiersdorf 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 Henkel AG and Beiersdorf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henkel AG Co and Beiersdorf AG ADR, you can compare the effects of market volatilities on Henkel AG and Beiersdorf 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 Henkel AG with a short position of Beiersdorf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henkel AG and Beiersdorf.
Diversification Opportunities for Henkel AG and Beiersdorf
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Henkel and Beiersdorf is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Henkel AG Co and Beiersdorf AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beiersdorf AG ADR and Henkel AG 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 Henkel AG Co are associated (or correlated) with Beiersdorf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beiersdorf AG ADR has no effect on the direction of Henkel AG i.e., Henkel AG and Beiersdorf go up and down completely randomly.
Pair Corralation between Henkel AG and Beiersdorf
Assuming the 90 days horizon Henkel AG Co is expected to generate 1.4 times more return on investment than Beiersdorf. However, Henkel AG is 1.4 times more volatile than Beiersdorf AG ADR. It trades about 0.04 of its potential returns per unit of risk. Beiersdorf AG ADR is currently generating about 0.03 per unit of risk. If you would invest 6,819 in Henkel AG Co on September 20, 2024 and sell it today you would earn a total of 1,551 from holding Henkel AG Co or generate 22.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 73.39% |
| Values | Daily Returns |
Henkel AG Co vs. Beiersdorf AG ADR
Performance |
| Timeline |
| Henkel AG |
| Beiersdorf AG ADR |
Henkel AG and Beiersdorf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henkel AG and Beiersdorf
The main advantage of trading using opposite Henkel AG and Beiersdorf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henkel AG position performs unexpectedly, Beiersdorf 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 Beiersdorf will offset losses from the drop in Beiersdorf's long position.| Henkel AG vs. Beiersdorf AG ADR | Henkel AG vs. Henkel AG Co | Henkel AG vs. LOreal Co ADR | Henkel AG vs. Church Dwight |
| Beiersdorf vs. Church Dwight | Beiersdorf vs. LOreal Co ADR | Beiersdorf vs. Unilever PLC | Beiersdorf 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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