Correlation Between Henkel AG and Yoshitsu

Can any of the company-specific risk be diversified away by investing in both Henkel AG and Yoshitsu 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 Yoshitsu 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 Yoshitsu Co Ltd, you can compare the effects of market volatilities on Henkel AG and Yoshitsu 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 Yoshitsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henkel AG and Yoshitsu.

Diversification Opportunities for Henkel AG and Yoshitsu

0.58

Correlation Coefficient

Henkel AG  Yoshitsu

Very weak diversification

The 3 months correlation between Henkel and Yoshitsu is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Henkel AG Co and Yoshitsu Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yoshitsu 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 Yoshitsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yoshitsu has no effect on the direction of Henkel AG i.e., Henkel AG and Yoshitsu go up and down completely randomly.

Pair Corralation between Henkel AG and Yoshitsu

Assuming the 90 days horizon Henkel AG Co is expected to generate 0.23 times more return on investment than Yoshitsu. However, Henkel AG Co is 4.34 times less risky than Yoshitsu. It trades about -0.01 of its potential returns per unit of risk. Yoshitsu Co Ltd is currently generating about -0.06 per unit of risk. If you would invest  8,047  in Henkel AG Co on September 16, 2024 and sell it today you would lose (136.00) from holding Henkel AG Co or give up 1.69% of portfolio value over 90 days.

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

Henkel AG Co  vs.  Yoshitsu Co Ltd

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Yoshitsu

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Henkel AG and Yoshitsu

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

The idea behind Henkel AG Co and Yoshitsu Co Ltd 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.