Correlation Between RATH Aktiengesellscha and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both RATH Aktiengesellscha and Unilever PLC 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 RATH Aktiengesellscha and Unilever PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RATH Aktiengesellschaft and Unilever PLC, you can compare the effects of market volatilities on RATH Aktiengesellscha and Unilever PLC 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 RATH Aktiengesellscha with a short position of Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of RATH Aktiengesellscha and Unilever PLC.
Diversification Opportunities for RATH Aktiengesellscha and Unilever PLC
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RATH and Unilever is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding RATH Aktiengesellschaft and Unilever PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC and RATH Aktiengesellscha 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 RATH Aktiengesellschaft are associated (or correlated) with Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC has no effect on the direction of RATH Aktiengesellscha i.e., RATH Aktiengesellscha and Unilever PLC go up and down completely randomly.
Pair Corralation between RATH Aktiengesellscha and Unilever PLC
Assuming the 90 days trading horizon RATH Aktiengesellschaft is expected to under-perform the Unilever PLC. But the stock apears to be less risky and, when comparing its historical volatility, RATH Aktiengesellschaft is 1.22 times less risky than Unilever PLC. The stock trades about -0.15 of its potential returns per unit of risk. The Unilever PLC is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 5,792 in Unilever PLC on August 25, 2024 and sell it today you would lose (260.00) from holding Unilever PLC or give up 4.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.78% |
| Values | Daily Returns |
RATH Aktiengesellschaft vs. Unilever PLC
Performance |
| Timeline |
| RATH Aktiengesellschaft |
| Unilever PLC |
RATH Aktiengesellscha and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RATH Aktiengesellscha and Unilever PLC
The main advantage of trading using opposite RATH Aktiengesellscha and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RATH Aktiengesellscha position performs unexpectedly, Unilever PLC 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 Unilever PLC will offset losses from the drop in Unilever PLC's long position.| RATH Aktiengesellscha vs. AMAG Austria Metall | RATH Aktiengesellscha vs. Addiko Bank AG | RATH Aktiengesellscha vs. BKS Bank AG | RATH Aktiengesellscha vs. Vienna Insurance Group |
| Unilever PLC vs. RATH Aktiengesellschaft | Unilever PLC vs. AT S Austria | Unilever PLC vs. BAWAG Group AG | Unilever PLC vs. Semperit Aktiengesellschaft Holding |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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