Correlation Between Shiseido and Unicharm
Can any of the company-specific risk be diversified away by investing in both Shiseido and Unicharm 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 Shiseido and Unicharm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shiseido Company and Unicharm, you can compare the effects of market volatilities on Shiseido and Unicharm 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 Shiseido with a short position of Unicharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shiseido and Unicharm.
Diversification Opportunities for Shiseido and Unicharm
Almost no diversification
The 3 months correlation between Shiseido and Unicharm is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Shiseido Company and Unicharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicharm and Shiseido 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 Shiseido Company are associated (or correlated) with Unicharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unicharm has no effect on the direction of Shiseido i.e., Shiseido and Unicharm go up and down completely randomly.
Pair Corralation between Shiseido and Unicharm
Assuming the 90 days horizon Shiseido Company is expected to generate 0.36 times more return on investment than Unicharm. However, Shiseido Company is 2.76 times less risky than Unicharm. It trades about 0.08 of its potential returns per unit of risk. Unicharm is currently generating about 0.02 per unit of risk. If you would invest 1,801 in Shiseido Company on September 15, 2024 and sell it today you would earn a total of 38.00 from holding Shiseido Company or generate 2.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shiseido Company vs. Unicharm
Performance |
| Timeline |
| Shiseido |
| Unicharm |
Shiseido and Unicharm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shiseido and Unicharm
The main advantage of trading using opposite Shiseido and Unicharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shiseido position performs unexpectedly, Unicharm 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 Unicharm will offset losses from the drop in Unicharm's long position.| Shiseido vs. Reckitt Benckiser Group | Shiseido vs. Church Dwight | Shiseido vs. Kimberly Clark de Mexico | Shiseido vs. LOreal Co ADR |
| Unicharm vs. Church Dwight | Unicharm vs. Kimberly Clark de Mexico | Unicharm vs. LOreal Co ADR | Unicharm vs. Shiseido Company |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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