Correlation Between Henkel AG and Bruush Oral

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

By analyzing existing cross correlation between Henkel AG Co and Bruush Oral Care, you can compare the effects of market volatilities on Henkel AG and Bruush Oral 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 Henkel AG with a short position of Bruush Oral. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henkel AG and Bruush Oral.

Diversification Opportunities for Henkel AG and Bruush Oral

0.22

Correlation Coefficient

Henkel AG  Bruush Oral

Modest diversification

The 3 months correlation between Henkel and Bruush is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Henkel AG Co and Bruush Oral Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bruush Oral Care and Henkel AG 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 Henkel AG Co are associated (or correlated) with Bruush Oral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bruush Oral Care has no effect on the direction of Henkel AG i.e., Henkel AG and Bruush Oral go up and down completely randomly.

Pair Corralation between Henkel AG and Bruush Oral

If you would invest  7,516  in Henkel AG Co on September 17, 2024 and sell it today you would earn a total of  395.00  from holding Henkel AG Co or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Henkel AG Co  vs.  Bruush Oral Care

Henkel AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Henkel AG Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Henkel AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Bruush Oral Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bruush Oral Care has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Bruush Oral is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Henkel AG and Bruush Oral

The main advantage of trading using opposite Henkel AG and Bruush Oral positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henkel AG position performs unexpectedly, Bruush Oral 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 Bruush Oral will offset losses from the drop in Bruush Oral's long position.

The idea behind Henkel AG Co and Bruush Oral Care 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.