Correlation Between Procter Gamble and Transmissora Aliana

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

Diversification Opportunities for Procter Gamble and Transmissora Aliana

0.44

Correlation Coefficient

Procter Gamble  Transmissora Aliana

Very weak diversification

The 3 months correlation between Procter and Transmissora is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and Transmissora Aliana de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transmissora Aliana 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 Transmissora Aliana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transmissora Aliana has no effect on the direction of Procter Gamble i.e., Procter Gamble and Transmissora Aliana go up and down completely randomly.

Pair Corralation between Procter Gamble and Transmissora Aliana

Assuming the 90 days trading horizon The Procter Gamble is expected to generate 1.37 times more return on investment than Transmissora Aliana. However, Procter Gamble is 1.37 times more volatile than Transmissora Aliana de. It trades about -0.02 of its potential returns per unit of risk. Transmissora Aliana de is currently generating about -0.04 per unit of risk. If you would invest  7,486  in The Procter Gamble on December 4, 2024 and sell it today you would lose (186.00) from holding The Procter Gamble or give up 2.48% of portfolio value over 90 days.

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

The Procter Gamble  vs.  Transmissora Aliana de

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.

Transmissora Aliana

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Procter Gamble and Transmissora Aliana

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

The idea behind The Procter Gamble and Transmissora Aliana de 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.