Correlation Between Iris Clothings and Procter Gamble

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

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

Diversification Opportunities for Iris Clothings and Procter Gamble

0.11

Correlation Coefficient

Iris Clothings  Procter Gamble

Average diversification

The 3 months correlation between Iris and Procter is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Iris Clothings 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 Iris Clothings 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 Iris Clothings 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 Iris Clothings i.e., Iris Clothings and Procter Gamble go up and down completely randomly.

Pair Corralation between Iris Clothings and Procter Gamble

Assuming the 90 days trading horizon Iris Clothings Limited is expected to generate 16.53 times more return on investment than Procter Gamble. However, Iris Clothings is 16.53 times more volatile than Procter Gamble Health. It trades about 0.05 of its potential returns per unit of risk. Procter Gamble Health is currently generating about 0.05 per unit of risk. If you would invest  6,044  in Iris Clothings Limited on October 25, 2024 and sell it today you would earn a total of  12.00  from holding Iris Clothings Limited or generate 0.2% return on investment over 90 days.

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

Iris Clothings Limited  vs.  Procter Gamble Health

Iris Clothings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iris Clothings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Iris Clothings is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Procter Gamble Health

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble Health are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Procter Gamble may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Iris Clothings and Procter Gamble

The main advantage of trading using opposite Iris Clothings and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iris Clothings 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 Iris Clothings 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.