Correlation Between Procter Gamble and Fras Le

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

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

Diversification Opportunities for Procter Gamble and Fras Le

-0.61

Correlation Coefficient

Procter Gamble  Fras Le

Excellent diversification

The 3 months correlation between Procter and Fras is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and Fras le SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fras le SA 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 The Procter Gamble are associated (or correlated) with Fras Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fras le SA has no effect on the direction of Procter Gamble i.e., Procter Gamble and Fras Le go up and down completely randomly.

Pair Corralation between Procter Gamble and Fras Le

Assuming the 90 days trading horizon The Procter Gamble is expected to under-perform the Fras Le. In addition to that, Procter Gamble is 1.26 times more volatile than Fras le SA. It trades about -0.05 of its total potential returns per unit of risk. Fras le SA is currently generating about 0.2 per unit of volatility. If you would invest  1,973  in Fras le SA on November 20, 2024 and sell it today you would earn a total of  366.00  from holding Fras le SA or generate 18.55% return on investment over 90 days.

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

The Procter Gamble  vs.  Fras le SA

Procter Gamble

Risk-Adjusted Performance

Very Weak

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

Fras le SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fras le SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fras Le unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Procter Gamble and Fras Le

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

The idea behind The Procter Gamble and Fras le 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.