Correlation Between Unilever PLC and Unicharm
Can any of the company-specific risk be diversified away by investing in both Unilever PLC 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 Unilever PLC and Unicharm 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 Unicharm, you can compare the effects of market volatilities on Unilever PLC 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 Unilever PLC with a short position of Unicharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and Unicharm.
Diversification Opportunities for Unilever PLC and Unicharm
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Unilever and Unicharm is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR and Unicharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicharm 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 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 Unilever PLC i.e., Unilever PLC and Unicharm go up and down completely randomly.
Pair Corralation between Unilever PLC and Unicharm
Allowing for the 90-day total investment horizon Unilever PLC ADR is expected to generate 0.29 times more return on investment than Unicharm. However, Unilever PLC ADR is 3.49 times less risky than Unicharm. It trades about 0.1 of its potential returns per unit of risk. Unicharm is currently generating about -0.02 per unit of risk. If you would invest 4,537 in Unilever PLC ADR on August 26, 2024 and sell it today you would earn a total of 1,324 from holding Unilever PLC ADR or generate 29.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC ADR vs. Unicharm
Performance |
| Timeline |
| Unilever PLC ADR |
| Unicharm |
Unilever PLC and Unicharm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and Unicharm
The main advantage of trading using opposite Unilever PLC and Unicharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC 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.| Unilever PLC vs. The Clorox | Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Procter Gamble | Unilever PLC vs. Church Dwight |
| Unicharm vs. LOreal Co ADR | Unicharm vs. Unilever PLC ADR | Unicharm vs. Kimberly Clark | Unicharm 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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