Correlation Between Henkel Ag and Beiersdorf Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Henkel Ag and Beiersdorf Aktiengesellscha 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 Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henkel Ag A and Beiersdorf Aktiengesellschaft, you can compare the effects of market volatilities on Henkel Ag and Beiersdorf Aktiengesellscha 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 Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henkel Ag and Beiersdorf Aktiengesellscha.
Diversification Opportunities for Henkel Ag and Beiersdorf Aktiengesellscha
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Henkel and Beiersdorf is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Henkel Ag A and Beiersdorf Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beiersdorf Aktiengesellscha 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 A are associated (or correlated) with Beiersdorf Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beiersdorf Aktiengesellscha has no effect on the direction of Henkel Ag i.e., Henkel Ag and Beiersdorf Aktiengesellscha go up and down completely randomly.
Pair Corralation between Henkel Ag and Beiersdorf Aktiengesellscha
Assuming the 90 days horizon Henkel Ag A is expected to generate 0.85 times more return on investment than Beiersdorf Aktiengesellscha. However, Henkel Ag A is 1.17 times less risky than Beiersdorf Aktiengesellscha. It trades about 0.05 of its potential returns per unit of risk. Beiersdorf Aktiengesellschaft is currently generating about 0.03 per unit of risk. If you would invest 1,664 in Henkel Ag A on September 3, 2024 and sell it today you would earn a total of 471.00 from holding Henkel Ag A or generate 28.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 70.51% |
| Values | Daily Returns |
Henkel Ag A vs. Beiersdorf Aktiengesellschaft
Performance |
| Timeline |
| Henkel Ag A |
| Beiersdorf Aktiengesellscha |
Henkel Ag and Beiersdorf Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henkel Ag and Beiersdorf Aktiengesellscha
The main advantage of trading using opposite Henkel Ag and Beiersdorf Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henkel Ag position performs unexpectedly, Beiersdorf Aktiengesellscha 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 Aktiengesellscha will offset losses from the drop in Beiersdorf Aktiengesellscha's long position.| Henkel Ag vs. Beiersdorf Aktiengesellschaft | Henkel Ag vs. Essity AB | Henkel Ag vs. Hengan International Group | Henkel Ag vs. LOral SA |
| Beiersdorf Aktiengesellscha vs. Henkel Ag A | Beiersdorf Aktiengesellscha vs. Essity AB | Beiersdorf Aktiengesellscha vs. Hengan International Group |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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