Correlation Between Shiseido Company and Unicharm

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

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

Diversification Opportunities for Shiseido Company and Unicharm

0.12

Correlation Coefficient

Shiseido Company  Unicharm

Average diversification

The 3 months correlation between Shiseido and Unicharm is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Shiseido Company and Unicharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicharm 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 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 Shiseido Company i.e., Shiseido Company and Unicharm go up and down completely randomly.

Pair Corralation between Shiseido Company and Unicharm

Assuming the 90 days horizon Shiseido Company is expected to generate 0.5 times more return on investment than Unicharm. However, Shiseido Company is 1.99 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  1,719  in Shiseido Company on December 24, 2024 and sell it today you would earn a total of  204.00  from holding Shiseido Company or generate 11.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Shiseido Company  vs.  Unicharm

Shiseido Company

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shiseido Company are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Shiseido Company showed solid returns over the last few months and may actually be approaching a breakup point.

Unicharm

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Unicharm are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, Unicharm is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Shiseido Company and Unicharm

The main advantage of trading using opposite Shiseido Company and Unicharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shiseido Company 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 Shiseido Company 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.