Correlation Between Procter Gamble and METISA Metalrgica

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

Diversification Opportunities for Procter Gamble and METISA Metalrgica

-0.14

Correlation Coefficient

Procter Gamble  METISA Metalrgica

Good diversification

The 3 months correlation between Procter and METISA is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and METISA Metalrgica Timboense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METISA Metalrgica 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 METISA Metalrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METISA Metalrgica has no effect on the direction of Procter Gamble i.e., Procter Gamble and METISA Metalrgica go up and down completely randomly.

Pair Corralation between Procter Gamble and METISA Metalrgica

Assuming the 90 days trading horizon The Procter Gamble is expected to generate 0.62 times more return on investment than METISA Metalrgica. However, The Procter Gamble is 1.62 times less risky than METISA Metalrgica. It trades about 0.16 of its potential returns per unit of risk. METISA Metalrgica Timboense is currently generating about -0.1 per unit of risk. If you would invest  6,617  in The Procter Gamble on September 2, 2024 and sell it today you would earn a total of  966.00  from holding The Procter Gamble or generate 14.6% 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.  METISA Metalrgica Timboense

Procter Gamble

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Procter Gamble are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Procter Gamble sustained solid returns over the last few months and may actually be approaching a breakup point.

METISA Metalrgica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METISA Metalrgica Timboense has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Procter Gamble and METISA Metalrgica

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

The idea behind The Procter Gamble and METISA Metalrgica Timboense 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.