Correlation Between Unilever PLC and PT Unilever
Can any of the company-specific risk be diversified away by investing in both Unilever PLC 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 Unilever PLC and PT Unilever 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 PT Unilever Indonesia, you can compare the effects of market volatilities on Unilever PLC 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 Unilever PLC with a short position of PT Unilever. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and PT Unilever.
Diversification Opportunities for Unilever PLC and PT Unilever
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Unilever and UNLRF is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR 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 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 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 Unilever PLC i.e., Unilever PLC and PT Unilever go up and down completely randomly.
Pair Corralation between Unilever PLC and PT Unilever
Allowing for the 90-day total investment horizon Unilever PLC ADR is expected to generate 0.32 times more return on investment than PT Unilever. However, Unilever PLC ADR is 3.15 times less risky than PT Unilever. It trades about -0.2 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 6,204 in Unilever PLC ADR on August 29, 2024 and sell it today you would lose (294.00) from holding Unilever PLC ADR or give up 4.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC ADR vs. PT Unilever Indonesia
Performance |
| Timeline |
| Unilever PLC ADR |
| PT Unilever Indonesia |
Unilever PLC and PT Unilever Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and PT Unilever
The main advantage of trading using opposite Unilever PLC and PT Unilever positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC 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.| Unilever PLC vs. The Clorox | Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Procter Gamble | Unilever PLC vs. Church Dwight |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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