Correlation Between OCI NV and Unilever PLC

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

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

Diversification Opportunities for OCI NV and Unilever PLC

-0.27

Correlation Coefficient

OCI NV  Unilever PLC

Very good diversification

The 3 months correlation between OCI and Unilever is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding OCI NV and Unilever PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC and OCI NV 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 OCI NV are associated (or correlated) with Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC has no effect on the direction of OCI NV i.e., OCI NV and Unilever PLC go up and down completely randomly.

Pair Corralation between OCI NV and Unilever PLC

Assuming the 90 days trading horizon OCI NV is expected to under-perform the Unilever PLC. But the stock apears to be less risky and, when comparing its historical volatility, OCI NV is 1.1 times less risky than Unilever PLC. The stock trades about 0.0 of its potential returns per unit of risk. The Unilever PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5,426  in Unilever PLC on December 30, 2024 and sell it today you would earn a total of  60.00  from holding Unilever PLC or generate 1.11% return on investment over 90 days.

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

OCI NV  vs.  Unilever PLC

OCI NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days OCI NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, OCI NV is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Unilever PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Unilever PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Unilever PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with OCI NV and Unilever PLC

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

The idea behind OCI NV and Unilever PLC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.