Correlation Between Ravi Kumar and Procter Gamble

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

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

Diversification Opportunities for Ravi Kumar and Procter Gamble

0.35

Correlation Coefficient

Ravi Kumar  Procter Gamble

Weak diversification

The 3 months correlation between Ravi and Procter is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ravi Kumar Distilleries and Procter Gamble Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble Health and Ravi Kumar 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 Ravi Kumar Distilleries 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 Health has no effect on the direction of Ravi Kumar i.e., Ravi Kumar and Procter Gamble go up and down completely randomly.

Pair Corralation between Ravi Kumar and Procter Gamble

Assuming the 90 days trading horizon Ravi Kumar Distilleries is expected to under-perform the Procter Gamble. In addition to that, Ravi Kumar is 1.65 times more volatile than Procter Gamble Health. It trades about -0.05 of its total potential returns per unit of risk. Procter Gamble Health is currently generating about 0.04 per unit of volatility. If you would invest  532,426  in Procter Gamble Health on December 24, 2024 and sell it today you would earn a total of  17,909  from holding Procter Gamble Health or generate 3.36% return on investment over 90 days.

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

Ravi Kumar Distilleries  vs.  Procter Gamble Health

Ravi Kumar Distilleries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ravi Kumar Distilleries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 3 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ravi Kumar and Procter Gamble

The main advantage of trading using opposite Ravi Kumar and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ravi Kumar 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 Ravi Kumar Distilleries and Procter Gamble Health 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 Stocks Directory module to find actively traded stocks across global markets.