Correlation Between Este Lauder and Unicharm

Can any of the company-specific risk be diversified away by investing in both Este Lauder 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 Este Lauder and Unicharm into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Este Lauder and Unicharm, you can compare the effects of market volatilities on Este Lauder 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 Este Lauder with a short position of Unicharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Este Lauder and Unicharm.

Diversification Opportunities for Este Lauder and Unicharm

-0.03

Correlation Coefficient

Este Lauder  Unicharm

Good diversification

The 3 months correlation between Este and Unicharm is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding The Este Lauder and Unicharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicharm and Este Lauder 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 The Este Lauder 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 Este Lauder i.e., Este Lauder and Unicharm go up and down completely randomly.

Pair Corralation between Este Lauder and Unicharm

Assuming the 90 days trading horizon The Este Lauder is expected to generate 0.98 times more return on investment than Unicharm. However, The Este Lauder is 1.02 times less risky than Unicharm. It trades about 0.18 of its potential returns per unit of risk. Unicharm is currently generating about -0.19 per unit of risk. If you would invest  7,160  in The Este Lauder on October 22, 2024 and sell it today you would earn a total of  480.00  from holding The Este Lauder or generate 6.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

The Este Lauder  vs.  Unicharm

Este Lauder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Este Lauder has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Este Lauder is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Unicharm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unicharm has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Este Lauder and Unicharm

The main advantage of trading using opposite Este Lauder and Unicharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Este Lauder 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.

The idea behind The Este Lauder and Unicharm pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.