Correlation Between Tupy SA and Procter Gamble

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

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

Diversification Opportunities for Tupy SA and Procter Gamble

-0.63

Correlation Coefficient

Tupy SA  Procter Gamble

Excellent diversification

The 3 months correlation between Tupy and Procter is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Tupy SA and The Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Tupy SA 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 Tupy 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 has no effect on the direction of Tupy SA i.e., Tupy SA and Procter Gamble go up and down completely randomly.

Pair Corralation between Tupy SA and Procter Gamble

Assuming the 90 days trading horizon Tupy SA is expected to under-perform the Procter Gamble. In addition to that, Tupy SA is 1.2 times more volatile than The Procter Gamble. It trades about -0.03 of its total potential returns per unit of risk. The Procter Gamble is currently generating about 0.02 per unit of volatility. If you would invest  6,793  in The Procter Gamble on October 26, 2024 and sell it today you would earn a total of  179.00  from holding The Procter Gamble or generate 2.64% return on investment over 90 days.

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

Tupy SA  vs.  The Procter Gamble

Tupy SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tupy SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tupy SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Procter Gamble

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Procter Gamble are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Tupy SA and Procter Gamble

The main advantage of trading using opposite Tupy SA and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tupy SA 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 Tupy SA and The Procter Gamble 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.