Correlation Between Unicharm and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both Unicharm and Estee Lauder 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 Unicharm and Estee Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unicharm and Estee Lauder Companies, you can compare the effects of market volatilities on Unicharm and Estee Lauder 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 Unicharm with a short position of Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unicharm and Estee Lauder.
Diversification Opportunities for Unicharm and Estee Lauder
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Unicharm and Estee is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Unicharm and Estee Lauder Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estee Lauder Companies and Unicharm 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 Unicharm are associated (or correlated) with Estee Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estee Lauder Companies has no effect on the direction of Unicharm i.e., Unicharm and Estee Lauder go up and down completely randomly.
Pair Corralation between Unicharm and Estee Lauder
Assuming the 90 days horizon Unicharm is expected to generate 1.1 times more return on investment than Estee Lauder. However, Unicharm is 1.1 times more volatile than Estee Lauder Companies. It trades about -0.01 of its potential returns per unit of risk. Estee Lauder Companies is currently generating about -0.07 per unit of risk. If you would invest 3,628 in Unicharm on August 30, 2024 and sell it today you would lose (1,101) from holding Unicharm or give up 30.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Unicharm vs. Estee Lauder Companies
Performance |
| Timeline |
| Unicharm |
| Estee Lauder Companies |
Unicharm and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unicharm and Estee Lauder
The main advantage of trading using opposite Unicharm and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unicharm position performs unexpectedly, Estee Lauder 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 Estee Lauder will offset losses from the drop in Estee Lauder's long position.| Unicharm vs. Estee Lauder Companies | Unicharm vs. Honest Company | Unicharm vs. Hims Hers Health | Unicharm vs. Procter Gamble |
| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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