Correlation Between Procter Gamble and Iris Clothings

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

By analyzing existing cross correlation between Procter Gamble Health and Iris Clothings Limited, you can compare the effects of market volatilities on Procter Gamble and Iris Clothings 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 Iris Clothings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Iris Clothings.

Diversification Opportunities for Procter Gamble and Iris Clothings

0.04

Correlation Coefficient

Procter Gamble  Iris Clothings

Significant diversification

The 3 months correlation between Procter and Iris is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble Health and Iris Clothings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iris Clothings 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 Procter Gamble Health are associated (or correlated) with Iris Clothings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iris Clothings has no effect on the direction of Procter Gamble i.e., Procter Gamble and Iris Clothings go up and down completely randomly.

Pair Corralation between Procter Gamble and Iris Clothings

Assuming the 90 days trading horizon Procter Gamble Health is expected to generate 0.71 times more return on investment than Iris Clothings. However, Procter Gamble Health is 1.41 times less risky than Iris Clothings. It trades about 0.02 of its potential returns per unit of risk. Iris Clothings Limited is currently generating about -0.21 per unit of risk. If you would invest  536,760  in Procter Gamble Health on December 25, 2024 and sell it today you would earn a total of  5,515  from holding Procter Gamble Health or generate 1.03% return on investment over 90 days.

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

Procter Gamble Health  vs.  Iris Clothings Limited

Procter Gamble Health

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble Health are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Procter Gamble is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Iris Clothings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iris Clothings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Procter Gamble and Iris Clothings

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

The idea behind Procter Gamble Health and Iris Clothings Limited 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.