Correlation Between Procter Gamble and Petro Viking

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

By analyzing existing cross correlation between Procter Gamble and Petro Viking Energy, you can compare the effects of market volatilities on Procter Gamble and Petro Viking 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 Petro Viking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Petro Viking.

Diversification Opportunities for Procter Gamble and Petro Viking

-0.43

Correlation Coefficient

Procter Gamble  Petro Viking

Very good diversification

The 3 months correlation between Procter and Petro is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Petro Viking Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petro Viking Energy 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 are associated (or correlated) with Petro Viking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petro Viking Energy has no effect on the direction of Procter Gamble i.e., Procter Gamble and Petro Viking go up and down completely randomly.

Pair Corralation between Procter Gamble and Petro Viking

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 322.92 times less return on investment than Petro Viking. But when comparing it to its historical volatility, Procter Gamble is 51.36 times less risky than Petro Viking. It trades about 0.03 of its potential returns per unit of risk. Petro Viking Energy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.10  in Petro Viking Energy on December 28, 2024 and sell it today you would earn a total of  0.26  from holding Petro Viking Energy or generate 260.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Procter Gamble  vs.  Petro Viking Energy

Procter Gamble

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Procter Gamble is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Petro Viking Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Petro Viking Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Petro Viking reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Procter Gamble and Petro Viking

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

The idea behind Procter Gamble and Petro Viking Energy 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.