Correlation Between Rigolleau and Procter Gamble

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

By analyzing existing cross correlation between Rigolleau SA and Procter Gamble DRC, you can compare the effects of market volatilities on Rigolleau and Procter Gamble 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 Rigolleau with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rigolleau and Procter Gamble.

Diversification Opportunities for Rigolleau and Procter Gamble

0.46

Correlation Coefficient

Rigolleau  Procter Gamble

Very weak diversification

The 3 months correlation between Rigolleau and Procter is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Rigolleau SA and Procter Gamble DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble DRC and Rigolleau 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 Rigolleau SA are associated (or correlated) with Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble DRC has no effect on the direction of Rigolleau i.e., Rigolleau and Procter Gamble go up and down completely randomly.

Pair Corralation between Rigolleau and Procter Gamble

Assuming the 90 days trading horizon Rigolleau SA is expected to generate 1.54 times more return on investment than Procter Gamble. However, Rigolleau is 1.54 times more volatile than Procter Gamble DRC. It trades about 0.04 of its potential returns per unit of risk. Procter Gamble DRC is currently generating about -0.14 per unit of risk. If you would invest  89,900  in Rigolleau SA on August 30, 2024 and sell it today you would earn a total of  3,500  from holding Rigolleau SA or generate 3.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Rigolleau SA  vs.  Procter Gamble DRC

Rigolleau SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rigolleau SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Rigolleau is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Procter Gamble DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Procter Gamble DRC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Rigolleau and Procter Gamble

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

The idea behind Rigolleau SA and Procter Gamble DRC 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.

Check out your portfolio center.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.