Correlation Between Mastercard and Unicharm Corp

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

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

Diversification Opportunities for Mastercard and Unicharm Corp

-0.74

Correlation Coefficient

Mastercard  Unicharm Corp

Pay attention - limited upside

The 3 months correlation between Mastercard and Unicharm is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Unicharm Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicharm Corp and Mastercard 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 Mastercard are associated (or correlated) with Unicharm Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unicharm Corp has no effect on the direction of Mastercard i.e., Mastercard and Unicharm Corp go up and down completely randomly.

Pair Corralation between Mastercard and Unicharm Corp

Assuming the 90 days horizon Mastercard is expected to generate 1.27 times less return on investment than Unicharm Corp. But when comparing it to its historical volatility, Mastercard is 6.73 times less risky than Unicharm Corp. It trades about 0.08 of its potential returns per unit of risk. Unicharm Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,340  in Unicharm Corp on September 26, 2024 and sell it today you would lose (547.00) from holding Unicharm Corp or give up 40.82% of portfolio value over 90 days.

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

Mastercard  vs.  Unicharm Corp

Mastercard

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Mastercard reported solid returns over the last few months and may actually be approaching a breakup point.

Unicharm Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unicharm Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Mastercard and Unicharm Corp

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

The idea behind Mastercard and Unicharm Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..