Correlation Between Natura Co and Kimberly Clark

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

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

Diversification Opportunities for Natura Co and Kimberly Clark

-0.43

Correlation Coefficient

Natura Co  Kimberly Clark

Very good diversification

The 3 months correlation between Natura and Kimberly is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Natura Co Holding and Kimberly Clark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark and Natura Co 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 Natura Co Holding are associated (or correlated) with Kimberly Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimberly Clark has no effect on the direction of Natura Co i.e., Natura Co and Kimberly Clark go up and down completely randomly.

Pair Corralation between Natura Co and Kimberly Clark

Assuming the 90 days trading horizon Natura Co is expected to generate 4.54 times less return on investment than Kimberly Clark. In addition to that, Natura Co is 2.2 times more volatile than Kimberly Clark. It trades about 0.0 of its total potential returns per unit of risk. Kimberly Clark is currently generating about 0.05 per unit of volatility. If you would invest  63,856  in Kimberly Clark on October 5, 2024 and sell it today you would earn a total of  18,169  from holding Kimberly Clark or generate 28.45% return on investment over 90 days.

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

Natura Co Holding  vs.  Kimberly Clark

Natura Co Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kimberly Clark

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kimberly Clark are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Kimberly Clark may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Natura Co and Kimberly Clark

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

The idea behind Natura Co Holding and Kimberly Clark 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.