Correlation Between 694308KB2 and Procter Gamble

Can any of the company-specific risk be diversified away by investing in both 694308KB2 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 694308KB2 and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PCG 42 01 MAR 29 and Procter Gamble, you can compare the effects of market volatilities on 694308KB2 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 694308KB2 with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of 694308KB2 and Procter Gamble.

Diversification Opportunities for 694308KB2 and Procter Gamble

0.21

Correlation Coefficient

694308KB2  Procter Gamble

Modest diversification

The 3 months correlation between 694308KB2 and Procter is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding PCG 42 01 MAR 29 and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and 694308KB2 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 PCG 42 01 MAR 29 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 694308KB2 i.e., 694308KB2 and Procter Gamble go up and down completely randomly.

Pair Corralation between 694308KB2 and Procter Gamble

Assuming the 90 days trading horizon 694308KB2 is expected to generate 1.94 times less return on investment than Procter Gamble. But when comparing it to its historical volatility, PCG 42 01 MAR 29 is 1.07 times less risky than Procter Gamble. It trades about 0.02 of its potential returns per unit of risk. Procter Gamble is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  13,506  in Procter Gamble on October 13, 2024 and sell it today you would earn a total of  2,350  from holding Procter Gamble or generate 17.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	68.15%
Values	Daily Returns

PCG 42 01 MAR 29  vs.  Procter Gamble

PCG 42 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PCG 42 01 MAR 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 694308KB2 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Procter Gamble

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with 694308KB2 and Procter Gamble

The main advantage of trading using opposite 694308KB2 and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 694308KB2 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 PCG 42 01 MAR 29 and 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.