Correlation Between Procter Gamble and Grendene

Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Grendene 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 Grendene 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 Grendene SA, you can compare the effects of market volatilities on Procter Gamble and Grendene 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 Grendene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Grendene.

Diversification Opportunities for Procter Gamble and Grendene

-0.05

Correlation Coefficient

Procter Gamble  Grendene

Good diversification

The 3 months correlation between Procter and Grendene is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and Grendene SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grendene 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 Grendene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grendene SA has no effect on the direction of Procter Gamble i.e., Procter Gamble and Grendene go up and down completely randomly.

Pair Corralation between Procter Gamble and Grendene

Assuming the 90 days trading horizon The Procter Gamble is expected to generate 0.98 times more return on investment than Grendene. However, The Procter Gamble is 1.02 times less risky than Grendene. It trades about 0.02 of its potential returns per unit of risk. Grendene SA is currently generating about -0.01 per unit of risk. If you would invest  6,793  in The Procter Gamble on October 26, 2024 and sell it today you would earn a total of  179.00  from holding The Procter Gamble or generate 2.64% return on investment over 90 days.

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

The Procter Gamble  vs.  Grendene SA

Procter Gamble

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Procter Gamble are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Grendene SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grendene SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Grendene may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Procter Gamble and Grendene

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

The idea behind The Procter Gamble and Grendene 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.