Correlation Between Unilever Indonesia and European Wax
Can any of the company-specific risk be diversified away by investing in both Unilever Indonesia and European Wax 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 Indonesia and European Wax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever Indonesia Tbk and European Wax Center, you can compare the effects of market volatilities on Unilever Indonesia and European Wax 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 Indonesia with a short position of European Wax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever Indonesia and European Wax.
Diversification Opportunities for Unilever Indonesia and European Wax
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Unilever and European is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Unilever Indonesia Tbk and European Wax Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Wax Center and Unilever Indonesia 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 Indonesia Tbk are associated (or correlated) with European Wax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Wax Center has no effect on the direction of Unilever Indonesia i.e., Unilever Indonesia and European Wax go up and down completely randomly.
Pair Corralation between Unilever Indonesia and European Wax
Assuming the 90 days horizon Unilever Indonesia Tbk is expected to generate 0.82 times more return on investment than European Wax. However, Unilever Indonesia Tbk is 1.22 times less risky than European Wax. It trades about -0.08 of its potential returns per unit of risk. European Wax Center is currently generating about -0.08 per unit of risk. If you would invest 448.00 in Unilever Indonesia Tbk on September 3, 2024 and sell it today you would lose (225.00) from holding Unilever Indonesia Tbk or give up 50.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever Indonesia Tbk vs. European Wax Center
Performance |
| Timeline |
| Unilever Indonesia Tbk |
| European Wax Center |
Unilever Indonesia and European Wax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever Indonesia and European Wax
The main advantage of trading using opposite Unilever Indonesia and European Wax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever Indonesia position performs unexpectedly, European Wax 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 European Wax will offset losses from the drop in European Wax's long position.| Unilever Indonesia vs. Inter Parfums | Unilever Indonesia vs. European Wax Center | Unilever Indonesia vs. Spectrum Brands Holdings | Unilever Indonesia vs. Edgewell Personal Care |
| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Mannatech Incorporated | European Wax vs. Spectrum Brands Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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