Correlation Between Procter Gamble and MRF

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

Diversification Opportunities for Procter Gamble and MRF

-0.09

Correlation Coefficient

Procter Gamble  MRF

Good diversification

The 3 months correlation between Procter and MRF is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble Health and MRF Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRF Limited 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 MRF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRF Limited has no effect on the direction of Procter Gamble i.e., Procter Gamble and MRF go up and down completely randomly.

Pair Corralation between Procter Gamble and MRF

Assuming the 90 days trading horizon Procter Gamble Health is expected to generate 1.55 times more return on investment than MRF. However, Procter Gamble is 1.55 times more volatile than MRF Limited. It trades about 0.03 of its potential returns per unit of risk. MRF Limited is currently generating about -0.19 per unit of risk. If you would invest  504,579  in Procter Gamble Health on December 30, 2024 and sell it today you would earn a total of  10,071  from holding Procter Gamble Health or generate 2.0% return on investment over 90 days.

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

Procter Gamble Health  vs.  MRF 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 2 (%) 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

MRF Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days MRF Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Procter Gamble and MRF

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

The idea behind Procter Gamble Health and MRF 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.