Correlation Between Shiseido Company and Stephan

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

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

Diversification Opportunities for Shiseido Company and Stephan

0.0

Correlation Coefficient

Shiseido Company  Stephan

Pay attention - limited upside

The 3 months correlation between Shiseido and Stephan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Shiseido Company and The Stephan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Stephan and Shiseido Company 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 Shiseido Company are associated (or correlated) with Stephan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Stephan has no effect on the direction of Shiseido Company i.e., Shiseido Company and Stephan go up and down completely randomly.

Pair Corralation between Shiseido Company and Stephan

If you would invest  1,658  in Shiseido Company on December 5, 2024 and sell it today you would earn a total of  163.00  from holding Shiseido Company or generate 9.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Shiseido Company  vs.  The Stephan Co

Shiseido Company

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shiseido Company are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Shiseido Company is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

The Stephan

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Stephan Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Stephan is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Shiseido Company and Stephan

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

The idea behind Shiseido Company and The Stephan Co 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.