Correlation Between Henkel AG and Nu Skin

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

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

Diversification Opportunities for Henkel AG and Nu Skin

-0.65

Correlation Coefficient

Henkel AG  Nu Skin

Excellent diversification

The 3 months correlation between Henkel and NUS is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Henkel AG Co and Nu Skin Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nu Skin Enterprises and Henkel AG 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 Henkel AG Co are associated (or correlated) with Nu Skin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nu Skin Enterprises has no effect on the direction of Henkel AG i.e., Henkel AG and Nu Skin go up and down completely randomly.

Pair Corralation between Henkel AG and Nu Skin

Assuming the 90 days horizon Henkel AG Co is expected to under-perform the Nu Skin. But the pink sheet apears to be less risky and, when comparing its historical volatility, Henkel AG Co is 1.78 times less risky than Nu Skin. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Nu Skin Enterprises is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  724.00  in Nu Skin Enterprises on September 15, 2024 and sell it today you would earn a total of  28.00  from holding Nu Skin Enterprises or generate 3.87% return on investment over 90 days.

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

Henkel AG Co  vs.  Nu Skin Enterprises

Henkel AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Henkel AG Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Henkel AG is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Nu Skin Enterprises

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nu Skin Enterprises are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Nu Skin may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Henkel AG and Nu Skin

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

The idea behind Henkel AG Co and Nu Skin Enterprises 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.