Correlation Between Unilever PLC and Basic Fit

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

By analyzing existing cross correlation between Unilever PLC and Basic Fit NV, you can compare the effects of market volatilities on Unilever PLC and Basic Fit 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 Basic Fit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and Basic Fit.

Diversification Opportunities for Unilever PLC and Basic Fit

-0.74

Correlation Coefficient

Unilever PLC  Basic Fit

Pay attention - limited upside

The 3 months correlation between Unilever and Basic is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC and Basic Fit NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Fit NV 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 are associated (or correlated) with Basic Fit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Fit NV has no effect on the direction of Unilever PLC i.e., Unilever PLC and Basic Fit go up and down completely randomly.

Pair Corralation between Unilever PLC and Basic Fit

Assuming the 90 days trading horizon Unilever PLC is expected to under-perform the Basic Fit. But the stock apears to be less risky and, when comparing its historical volatility, Unilever PLC is 1.87 times less risky than Basic Fit. The stock trades about -0.17 of its potential returns per unit of risk. The Basic Fit NV is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  1,912  in Basic Fit NV on April 20, 2025 and sell it today you would earn a total of  716.00  from holding Basic Fit NV or generate 37.45% return on investment over 90 days.

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

Unilever PLC  vs.  Basic Fit NV

Unilever PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unilever PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Basic Fit NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Basic Fit NV are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Basic Fit unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unilever PLC and Basic Fit

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

The idea behind Unilever PLC and Basic Fit NV 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.