Correlation Between Unilever PLC and Farmmi
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and Farmmi 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 Unilever PLC and Farmmi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever PLC ADR and Farmmi Inc, you can compare the effects of market volatilities on Unilever PLC and Farmmi 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 Unilever PLC with a short position of Farmmi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and Farmmi.
Diversification Opportunities for Unilever PLC and Farmmi
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Unilever and Farmmi is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR and Farmmi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmmi Inc and Unilever PLC 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 Unilever PLC ADR are associated (or correlated) with Farmmi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmmi Inc has no effect on the direction of Unilever PLC i.e., Unilever PLC and Farmmi go up and down completely randomly.
Pair Corralation between Unilever PLC and Farmmi
Allowing for the 90-day total investment horizon Unilever PLC ADR is expected to generate 0.16 times more return on investment than Farmmi. However, Unilever PLC ADR is 6.19 times less risky than Farmmi. It trades about 0.05 of its potential returns per unit of risk. Farmmi Inc is currently generating about -0.06 per unit of risk. If you would invest 4,774 in Unilever PLC ADR on August 27, 2024 and sell it today you would earn a total of 1,087 from holding Unilever PLC ADR or generate 22.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC ADR vs. Farmmi Inc
Performance |
| Timeline |
| Unilever PLC ADR |
| Farmmi Inc |
Unilever PLC and Farmmi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and Farmmi
The main advantage of trading using opposite Unilever PLC and Farmmi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, Farmmi 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 Farmmi will offset losses from the drop in Farmmi's long position.| Unilever PLC vs. The Clorox | Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Procter Gamble | Unilever PLC vs. Church Dwight |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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