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 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
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Unilever and Unicharm is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC 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 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
Assuming the 90 days horizon Unilever PLC is expected to generate 0.76 times more return on investment than Unicharm. However, Unilever PLC is 1.32 times less risky than Unicharm. It trades about 0.03 of its potential returns per unit of risk. Unicharm is currently generating about -0.01 per unit of risk. If you would invest 4,710 in Unilever PLC on August 26, 2024 and sell it today you would earn a total of 852.00 from holding Unilever PLC or generate 18.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.98% |
| Values | Daily Returns |
Unilever PLC vs. Unicharm
Performance |
| Timeline |
| Unilever PLC |
| 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. LOreal Co ADR | Unilever PLC vs. Estee Lauder Companies | Unilever PLC vs. Church Dwight | Unilever PLC vs. LOral SA |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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