Correlation Between Weiss Korea and Henkel AG
Can any of the company-specific risk be diversified away by investing in both Weiss Korea and Henkel AG 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 Weiss Korea and Henkel AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weiss Korea Opportunity and Henkel AG Co, you can compare the effects of market volatilities on Weiss Korea and Henkel AG 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 Weiss Korea with a short position of Henkel AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weiss Korea and Henkel AG.
Diversification Opportunities for Weiss Korea and Henkel AG
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Weiss and Henkel is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Weiss Korea Opportunity and Henkel AG Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henkel AG and Weiss Korea 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 Weiss Korea Opportunity are associated (or correlated) with Henkel AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henkel AG has no effect on the direction of Weiss Korea i.e., Weiss Korea and Henkel AG go up and down completely randomly.
Pair Corralation between Weiss Korea and Henkel AG
Assuming the 90 days trading horizon Weiss Korea Opportunity is expected to generate 4.41 times more return on investment than Henkel AG. However, Weiss Korea is 4.41 times more volatile than Henkel AG Co. It trades about 0.23 of its potential returns per unit of risk. Henkel AG Co is currently generating about -0.01 per unit of risk. If you would invest 13,550 in Weiss Korea Opportunity on November 3, 2024 and sell it today you would earn a total of 2,604 from holding Weiss Korea Opportunity or generate 19.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weiss Korea Opportunity vs. Henkel AG Co
Performance |
| Timeline |
| Weiss Korea Opportunity |
| Henkel AG |
Weiss Korea and Henkel AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weiss Korea and Henkel AG
The main advantage of trading using opposite Weiss Korea and Henkel AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weiss Korea position performs unexpectedly, Henkel AG 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 Henkel AG will offset losses from the drop in Henkel AG's long position.| Weiss Korea vs. Take Two Interactive Software | Weiss Korea vs. URU Metals | Weiss Korea vs. Science in Sport | Weiss Korea vs. Universal Display Corp |
| Henkel AG vs. Southwest Airlines Co | Henkel AG vs. BW Offshore | Henkel AG vs. Pan American Silver | Henkel AG vs. Invesco Physical Silver |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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