Correlation Between Inter Parfums and Shiseido
Can any of the company-specific risk be diversified away by investing in both Inter Parfums and Shiseido 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 Inter Parfums and Shiseido into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inter Parfums and Shiseido Company, you can compare the effects of market volatilities on Inter Parfums and Shiseido 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 Inter Parfums with a short position of Shiseido. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Parfums and Shiseido.
Diversification Opportunities for Inter Parfums and Shiseido
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Inter and Shiseido is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Inter Parfums and Shiseido Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shiseido and Inter Parfums 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 Inter Parfums are associated (or correlated) with Shiseido. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shiseido has no effect on the direction of Inter Parfums i.e., Inter Parfums and Shiseido go up and down completely randomly.
Pair Corralation between Inter Parfums and Shiseido
Given the investment horizon of 90 days Inter Parfums is expected to generate 0.9 times more return on investment than Shiseido. However, Inter Parfums is 1.11 times less risky than Shiseido. It trades about 0.27 of its potential returns per unit of risk. Shiseido Company is currently generating about -0.36 per unit of risk. If you would invest 12,441 in Inter Parfums on August 28, 2024 and sell it today you would earn a total of 1,398 from holding Inter Parfums or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inter Parfums vs. Shiseido Company
Performance |
| Timeline |
| Inter Parfums |
| Shiseido |
Inter Parfums and Shiseido Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inter Parfums and Shiseido
The main advantage of trading using opposite Inter Parfums and Shiseido positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Parfums position performs unexpectedly, Shiseido 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 Shiseido will offset losses from the drop in Shiseido's long position.| Inter Parfums vs. J J Snack | Inter Parfums vs. John B Sanfilippo | Inter Parfums vs. Innospec | Inter Parfums vs. Independent Bank |
| Shiseido vs. Reckitt Benckiser Group | Shiseido vs. Church Dwight | Shiseido vs. Kimberly Clark de Mexico | Shiseido vs. LOreal Co ADR |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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