Correlation Between Procter Gamble and NaturalShrimp

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

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

Diversification Opportunities for Procter Gamble and NaturalShrimp

-0.54

Correlation Coefficient

Procter Gamble  NaturalShrimp

Excellent diversification

The 3 months correlation between Procter and NaturalShrimp is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and NaturalShrimp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NaturalShrimp 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 NaturalShrimp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NaturalShrimp has no effect on the direction of Procter Gamble i.e., Procter Gamble and NaturalShrimp go up and down completely randomly.

Pair Corralation between Procter Gamble and NaturalShrimp

Allowing for the 90-day total investment horizon Procter Gamble is expected to under-perform the NaturalShrimp. But the stock apears to be less risky and, when comparing its historical volatility, Procter Gamble is 13.04 times less risky than NaturalShrimp. The stock trades about -0.02 of its potential returns per unit of risk. The NaturalShrimp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.35  in NaturalShrimp on September 13, 2024 and sell it today you would earn a total of  0.01  from holding NaturalShrimp or generate 2.86% return on investment over 90 days.

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

Procter Gamble  vs.  NaturalShrimp

Procter Gamble

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Procter Gamble has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

NaturalShrimp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NaturalShrimp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady primary indicators, NaturalShrimp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Procter Gamble and NaturalShrimp

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

The idea behind Procter Gamble and NaturalShrimp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.