Correlation Between Unilever PLC and Shiseido

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

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

Diversification Opportunities for Unilever PLC and Shiseido

-0.2

Correlation Coefficient

Unilever PLC  Shiseido

Good diversification

The 3 months correlation between Unilever and Shiseido is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR and Shiseido Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shiseido and Unilever PLC 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 Unilever PLC ADR are associated (or correlated) with Shiseido. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shiseido has no effect on the direction of Unilever PLC i.e., Unilever PLC and Shiseido go up and down completely randomly.

Pair Corralation between Unilever PLC and Shiseido

Allowing for the 90-day total investment horizon Unilever PLC ADR is expected to under-perform the Shiseido. But the stock apears to be less risky and, when comparing its historical volatility, Unilever PLC ADR is 2.5 times less risky than Shiseido. The stock trades about -0.08 of its potential returns per unit of risk. The Shiseido Company is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,636  in Shiseido Company on May 6, 2025 and sell it today you would earn a total of  15.00  from holding Shiseido Company or generate 0.92% return on investment over 90 days.

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

Unilever PLC ADR  vs.  Shiseido Company

Unilever PLC ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unilever PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Unilever PLC is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Shiseido

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 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Unilever PLC and Shiseido

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

The idea behind Unilever PLC ADR and Shiseido Company 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.