Correlation Between Unilever PLC and Hansa Investment
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and Hansa Investment 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 Hansa Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever PLC and Hansa Investment, you can compare the effects of market volatilities on Unilever PLC and Hansa Investment 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 Hansa Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and Hansa Investment.
Diversification Opportunities for Unilever PLC and Hansa Investment
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Unilever and Hansa is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC and Hansa Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Investment 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 are associated (or correlated) with Hansa Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Investment has no effect on the direction of Unilever PLC i.e., Unilever PLC and Hansa Investment go up and down completely randomly.
Pair Corralation between Unilever PLC and Hansa Investment
Assuming the 90 days trading horizon Unilever PLC is expected to under-perform the Hansa Investment. But the stock apears to be less risky and, when comparing its historical volatility, Unilever PLC is 1.59 times less risky than Hansa Investment. The stock trades about -0.06 of its potential returns per unit of risk. The Hansa Investment is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 22,599 in Hansa Investment on September 4, 2024 and sell it today you would lose (99.00) from holding Hansa Investment or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC vs. Hansa Investment
Performance |
| Timeline |
| Unilever PLC |
| Hansa Investment |
Unilever PLC and Hansa Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and Hansa Investment
The main advantage of trading using opposite Unilever PLC and Hansa Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, Hansa Investment 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 Hansa Investment will offset losses from the drop in Hansa Investment's long position.| Unilever PLC vs. Hansa Investment | Unilever PLC vs. Herald Investment Trust | Unilever PLC vs. Coeur Mining | Unilever PLC vs. TR Property Investment |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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