Correlation Between Alkali Metals and Procter Gamble

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

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

Diversification Opportunities for Alkali Metals and Procter Gamble

0.23

Correlation Coefficient

Alkali Metals  Procter Gamble

Modest diversification

The 3 months correlation between Alkali and Procter is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Alkali Metals Limited and Procter Gamble Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble Health and Alkali Metals 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 Alkali Metals Limited 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 Health has no effect on the direction of Alkali Metals i.e., Alkali Metals and Procter Gamble go up and down completely randomly.

Pair Corralation between Alkali Metals and Procter Gamble

Assuming the 90 days trading horizon Alkali Metals Limited is expected to under-perform the Procter Gamble. In addition to that, Alkali Metals is 1.12 times more volatile than Procter Gamble Health. It trades about 0.0 of its total potential returns per unit of risk. Procter Gamble Health is currently generating about 0.09 per unit of volatility. If you would invest  504,242  in Procter Gamble Health on September 19, 2024 and sell it today you would earn a total of  48,618  from holding Procter Gamble Health or generate 9.64% return on investment over 90 days.

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

Alkali Metals Limited  vs.  Procter Gamble Health

Alkali Metals Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alkali Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Alkali Metals is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Procter Gamble Health

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble Health are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Procter Gamble may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Alkali Metals and Procter Gamble

The main advantage of trading using opposite Alkali Metals and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alkali Metals 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 Alkali Metals Limited and Procter Gamble Health 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.