Correlation Between Reckitt Benckiser and PT Unilever
Can any of the company-specific risk be diversified away by investing in both Reckitt Benckiser 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 Reckitt Benckiser and PT Unilever into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reckitt Benckiser Group and PT Unilever Indonesia, you can compare the effects of market volatilities on Reckitt Benckiser 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 Reckitt Benckiser with a short position of PT Unilever. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reckitt Benckiser and PT Unilever.
Diversification Opportunities for Reckitt Benckiser and PT Unilever
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reckitt and UNLRF is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Reckitt Benckiser Group 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 Reckitt Benckiser 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 Reckitt Benckiser Group 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 Reckitt Benckiser i.e., Reckitt Benckiser and PT Unilever go up and down completely randomly.
Pair Corralation between Reckitt Benckiser and PT Unilever
Assuming the 90 days horizon Reckitt Benckiser Group is expected to generate 0.52 times more return on investment than PT Unilever. However, Reckitt Benckiser Group is 1.91 times less risky than PT Unilever. It trades about -0.04 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 1,260 in Reckitt Benckiser Group on August 29, 2024 and sell it today you would lose (22.00) from holding Reckitt Benckiser Group or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reckitt Benckiser Group vs. PT Unilever Indonesia
Performance |
| Timeline |
| Reckitt Benckiser |
| PT Unilever Indonesia |
Reckitt Benckiser and PT Unilever Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reckitt Benckiser and PT Unilever
The main advantage of trading using opposite Reckitt Benckiser and PT Unilever positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reckitt Benckiser 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.| Reckitt Benckiser vs. LOral SA | Reckitt Benckiser vs. LOreal Co ADR | Reckitt Benckiser vs. Unilever PLC ADR | Reckitt Benckiser vs. Kimberly Clark |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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