Correlation Between Kimberly Clark and Unicharm

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

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

Diversification Opportunities for Kimberly Clark and Unicharm

0.41

Correlation Coefficient

Kimberly Clark  Unicharm

Very weak diversification

The 3 months correlation between Kimberly and Unicharm is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Kimberly Clark de Mexico and Unicharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicharm and Kimberly Clark 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 Kimberly Clark de Mexico 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 Kimberly Clark i.e., Kimberly Clark and Unicharm go up and down completely randomly.

Pair Corralation between Kimberly Clark and Unicharm

Assuming the 90 days horizon Kimberly Clark de Mexico is expected to under-perform the Unicharm. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kimberly Clark de Mexico is 17.86 times less risky than Unicharm. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Unicharm is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,075  in Unicharm on October 22, 2024 and sell it today you would lose (290.00) from holding Unicharm or give up 26.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.12%
Values	Daily Returns

Kimberly Clark de Mexico  vs.  Unicharm

Kimberly Clark de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kimberly Clark de Mexico has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Kimberly Clark is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 conflicting performance in the last few months, the Stock's technical 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 Kimberly Clark and Unicharm

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

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