Correlation Between Procter Gamble and Holcim Argentina

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

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

Diversification Opportunities for Procter Gamble and Holcim Argentina

-0.86

Correlation Coefficient

Procter Gamble  Holcim Argentina

Pay attention - limited upside

The 3 months correlation between Procter and Holcim is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble DRC and Holcim Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim Argentina and Procter Gamble 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 Procter Gamble DRC are associated (or correlated) with Holcim Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holcim Argentina has no effect on the direction of Procter Gamble i.e., Procter Gamble and Holcim Argentina go up and down completely randomly.

Pair Corralation between Procter Gamble and Holcim Argentina

Assuming the 90 days horizon Procter Gamble DRC is expected to generate 0.46 times more return on investment than Holcim Argentina. However, Procter Gamble DRC is 2.16 times less risky than Holcim Argentina. It trades about 0.12 of its potential returns per unit of risk. Holcim Argentina SA is currently generating about -0.07 per unit of risk. If you would invest  1,327,493  in Procter Gamble DRC on December 30, 2024 and sell it today you would earn a total of  135,007  from holding Procter Gamble DRC or generate 10.17% return on investment over 90 days.

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

Procter Gamble DRC  vs.  Holcim Argentina SA

Procter Gamble DRC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble DRC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Procter Gamble may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Holcim Argentina

Risk-Adjusted Performance

Very Weak

Over the last 90 days Holcim Argentina SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Procter Gamble and Holcim Argentina

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

The idea behind Procter Gamble DRC and Holcim Argentina SA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.