Correlation Between Procter Gamble and Mundial SA

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

Diversification Opportunities for Procter Gamble and Mundial SA

-0.17

Correlation Coefficient

Procter Gamble  Mundial SA

Good diversification

The 3 months correlation between Procter and Mundial is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and Mundial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mundial 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 Mundial SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mundial SA has no effect on the direction of Procter Gamble i.e., Procter Gamble and Mundial SA go up and down completely randomly.

Pair Corralation between Procter Gamble and Mundial SA

Assuming the 90 days trading horizon The Procter Gamble is expected to under-perform the Mundial SA. But the stock apears to be less risky and, when comparing its historical volatility, The Procter Gamble is 1.94 times less risky than Mundial SA. The stock trades about -0.06 of its potential returns per unit of risk. The Mundial SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,697  in Mundial SA on December 30, 2024 and sell it today you would earn a total of  243.00  from holding Mundial SA or generate 14.32% 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.  Mundial 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.

Mundial SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mundial SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mundial SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Procter Gamble and Mundial SA

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

The idea behind The Procter Gamble and Mundial 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.