Correlation Between Unicharm and Easy Software

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

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

Diversification Opportunities for Unicharm and Easy Software

-0.55

Correlation Coefficient

Unicharm  Easy Software

Excellent diversification

The 3 months correlation between Unicharm and Easy is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Unicharm and Easy Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easy Software AG and Unicharm 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 Unicharm are associated (or correlated) with Easy Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easy Software AG has no effect on the direction of Unicharm i.e., Unicharm and Easy Software go up and down completely randomly.

Pair Corralation between Unicharm and Easy Software

Assuming the 90 days horizon Unicharm is expected to under-perform the Easy Software. But the stock apears to be less risky and, when comparing its historical volatility, Unicharm is 1.36 times less risky than Easy Software. The stock trades about -0.2 of its potential returns per unit of risk. The Easy Software AG is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,840  in Easy Software AG on October 26, 2024 and sell it today you would lose (90.00) from holding Easy Software AG or give up 4.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Unicharm  vs.  Easy Software AG

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 unsteady 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.

Easy Software AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Easy Software AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Easy Software displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unicharm and Easy Software

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

The idea behind Unicharm and Easy Software AG 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.