Correlation Between Kimberly Clark and PT Unilever
Can any of the company-specific risk be diversified away by investing in both Kimberly Clark and PT Unilever 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 Kimberly Clark and PT Unilever into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kimberly Clark and PT Unilever Indonesia, you can compare the effects of market volatilities on Kimberly Clark and PT Unilever 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 Kimberly Clark with a short position of PT Unilever. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimberly Clark and PT Unilever.
Diversification Opportunities for Kimberly Clark and PT Unilever
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kimberly and UNLRF is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kimberly Clark and PT Unilever Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Unilever Indonesia and Kimberly Clark 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 Kimberly Clark are associated (or correlated) with PT Unilever. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Unilever Indonesia has no effect on the direction of Kimberly Clark i.e., Kimberly Clark and PT Unilever go up and down completely randomly.
Pair Corralation between Kimberly Clark and PT Unilever
Considering the 90-day investment horizon Kimberly Clark is expected to generate 0.26 times more return on investment than PT Unilever. However, Kimberly Clark is 3.86 times less risky than PT Unilever. It trades about 0.16 of its potential returns per unit of risk. PT Unilever Indonesia is currently generating about -0.3 per unit of risk. If you would invest 13,562 in Kimberly Clark on August 29, 2024 and sell it today you would earn a total of 411.00 from holding Kimberly Clark or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kimberly Clark vs. PT Unilever Indonesia
Performance |
| Timeline |
| Kimberly Clark |
| PT Unilever Indonesia |
Kimberly Clark and PT Unilever Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kimberly Clark and PT Unilever
The main advantage of trading using opposite Kimberly Clark and PT Unilever positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimberly Clark position performs unexpectedly, PT Unilever 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 PT Unilever will offset losses from the drop in PT Unilever's long position.| Kimberly Clark vs. Unilever PLC ADR | Kimberly Clark vs. Estee Lauder Companies | Kimberly Clark vs. ELF Beauty | Kimberly Clark vs. Coty Inc |
| PT Unilever vs. LOreal Co ADR | PT Unilever vs. Unilever PLC ADR | PT Unilever vs. Kimberly Clark | PT Unilever vs. The Clorox |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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