Correlation Between Unicharm and Church Dwight

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

By analyzing existing cross correlation between Unicharm and Church Dwight, you can compare the effects of market volatilities on Unicharm and Church Dwight 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 Church Dwight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unicharm and Church Dwight.

Diversification Opportunities for Unicharm and Church Dwight

-0.03

Correlation Coefficient

Unicharm  Church Dwight

Good diversification

The 3 months correlation between Unicharm and Church is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Unicharm and Church Dwight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Church Dwight 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 Church Dwight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Church Dwight has no effect on the direction of Unicharm i.e., Unicharm and Church Dwight go up and down completely randomly.

Pair Corralation between Unicharm and Church Dwight

Assuming the 90 days horizon Unicharm is expected to generate 4.08 times more return on investment than Church Dwight. However, Unicharm is 4.08 times more volatile than Church Dwight. It trades about 0.05 of its potential returns per unit of risk. Church Dwight is currently generating about 0.06 per unit of risk. If you would invest  735.00  in Unicharm on December 28, 2024 and sell it today you would earn a total of  61.00  from holding Unicharm or generate 8.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Unicharm  vs.  Church Dwight

Unicharm

Risk-Adjusted Performance

Insignificant

Over the last 90 days Unicharm has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak technical indicators, Unicharm reported solid returns over the last few months and may actually be approaching a breakup point.

Church Dwight

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Church Dwight are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Church Dwight is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Unicharm and Church Dwight

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

The idea behind Unicharm and Church Dwight 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.