Correlation Between Honest and Hengan International
Can any of the company-specific risk be diversified away by investing in both Honest and Hengan International 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 Honest and Hengan International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honest Company and Hengan International Group, you can compare the effects of market volatilities on Honest and Hengan International 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 Honest with a short position of Hengan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honest and Hengan International.
Diversification Opportunities for Honest and Hengan International
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Honest and Hengan is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Honest Company and Hengan International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengan International and Honest 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 Honest Company are associated (or correlated) with Hengan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengan International has no effect on the direction of Honest i.e., Honest and Hengan International go up and down completely randomly.
Pair Corralation between Honest and Hengan International
Given the investment horizon of 90 days Honest Company is expected to generate 3.54 times more return on investment than Hengan International. However, Honest is 3.54 times more volatile than Hengan International Group. It trades about 0.67 of its potential returns per unit of risk. Hengan International Group is currently generating about -0.09 per unit of risk. If you would invest 384.00 in Honest Company on September 3, 2024 and sell it today you would earn a total of 445.00 from holding Honest Company or generate 115.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Honest Company vs. Hengan International Group
Performance |
| Timeline |
| Honest Company |
| Hengan International |
Honest and Hengan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honest and Hengan International
The main advantage of trading using opposite Honest and Hengan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honest position performs unexpectedly, Hengan International 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 Hengan International will offset losses from the drop in Hengan International's long position.| Honest vs. Estee Lauder Companies | Honest vs. Hims Hers Health | Honest vs. Procter Gamble | Honest vs. Coty Inc |
| Hengan International vs. LOral SA | Hengan International vs. LOreal Co ADR | Hengan International vs. Unilever PLC ADR | Hengan International 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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