Correlation Between Procter Gamble and 00165CAP9

Can any of the company-specific risk be diversified away by investing in both Procter Gamble and 00165CAP9 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 00165CAP9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Procter Gamble and AMC ENTMT HLDGS, you can compare the effects of market volatilities on Procter Gamble and 00165CAP9 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 00165CAP9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and 00165CAP9.

Diversification Opportunities for Procter Gamble and 00165CAP9

-0.38

Correlation Coefficient

Procter Gamble  00165CAP9

Very good diversification

The 3 months correlation between Procter and 00165CAP9 is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and AMC ENTMT HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC ENTMT HLDGS 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 00165CAP9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMC ENTMT HLDGS has no effect on the direction of Procter Gamble i.e., Procter Gamble and 00165CAP9 go up and down completely randomly.

Pair Corralation between Procter Gamble and 00165CAP9

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 2.1 times more return on investment than 00165CAP9. However, Procter Gamble is 2.1 times more volatile than AMC ENTMT HLDGS. It trades about -0.04 of its potential returns per unit of risk. AMC ENTMT HLDGS is currently generating about -0.12 per unit of risk. If you would invest  17,817  in Procter Gamble on November 29, 2024 and sell it today you would lose (615.00) from holding Procter Gamble or give up 3.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

Procter Gamble  vs.  AMC ENTMT HLDGS

Procter Gamble

Risk-Adjusted Performance

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.

AMC ENTMT HLDGS

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMC ENTMT HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00165CAP9 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Procter Gamble and 00165CAP9

The main advantage of trading using opposite Procter Gamble and 00165CAP9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, 00165CAP9 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 00165CAP9 will offset losses from the drop in 00165CAP9's long position.

The idea behind Procter Gamble and AMC ENTMT HLDGS 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.