Correlation Between Procter Gamble and Unicharm

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

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

Diversification Opportunities for Procter Gamble and Unicharm

-0.75

Correlation Coefficient

Procter Gamble  Unicharm

Pay attention - limited upside

The 3 months correlation between Procter and Unicharm is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and Unicharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicharm and Procter Gamble 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 The Procter Gamble 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 Procter Gamble i.e., Procter Gamble and Unicharm go up and down completely randomly.

Pair Corralation between Procter Gamble and Unicharm

Assuming the 90 days horizon The Procter Gamble is expected to generate 0.33 times more return on investment than Unicharm. However, The Procter Gamble is 3.0 times less risky than Unicharm. It trades about 0.08 of its potential returns per unit of risk. Unicharm is currently generating about -0.02 per unit of risk. If you would invest  13,047  in The Procter Gamble on October 5, 2024 and sell it today you would earn a total of  3,145  from holding The Procter Gamble or generate 24.11% return on investment over 90 days.

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

The Procter Gamble  vs.  Unicharm

Procter Gamble

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days The Procter Gamble has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, Procter Gamble may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 uncertain performance in the last few months, the Stock's basic 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 Procter Gamble and Unicharm

The main advantage of trading using opposite Procter Gamble and Unicharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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 The Procter Gamble 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 Global Correlations module to find global opportunities by holding instruments from different markets.