Correlation Between Agrometal SAI and Procter Gamble

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

By analyzing existing cross correlation between Agrometal SAI and Procter Gamble DRC, you can compare the effects of market volatilities on Agrometal SAI and Procter Gamble 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 Agrometal SAI with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agrometal SAI and Procter Gamble.

Diversification Opportunities for Agrometal SAI and Procter Gamble

-0.33

Correlation Coefficient

Agrometal SAI  Procter Gamble

Very good diversification

The 3 months correlation between Agrometal and Procter is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Agrometal SAI and Procter Gamble DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble DRC and Agrometal SAI 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 Agrometal SAI are associated (or correlated) with Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble DRC has no effect on the direction of Agrometal SAI i.e., Agrometal SAI and Procter Gamble go up and down completely randomly.

Pair Corralation between Agrometal SAI and Procter Gamble

Assuming the 90 days trading horizon Agrometal SAI is expected to generate 2.18 times more return on investment than Procter Gamble. However, Agrometal SAI is 2.18 times more volatile than Procter Gamble DRC. It trades about 0.14 of its potential returns per unit of risk. Procter Gamble DRC is currently generating about -0.14 per unit of risk. If you would invest  5,660  in Agrometal SAI on August 30, 2024 and sell it today you would earn a total of  1,390  from holding Agrometal SAI or generate 24.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Agrometal SAI  vs.  Procter Gamble DRC

Agrometal SAI

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agrometal SAI are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Agrometal SAI sustained solid returns over the last few months and may actually be approaching a breakup point.

Procter Gamble DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Procter Gamble DRC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Agrometal SAI and Procter Gamble

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

The idea behind Agrometal SAI and Procter Gamble DRC 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 CEOs Directory module to screen CEOs from public companies around the world.