Correlation Between Varun Beverages and Procter Gamble

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

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

Diversification Opportunities for Varun Beverages and Procter Gamble

0.17

Correlation Coefficient

Varun Beverages  Procter Gamble

Average diversification

The 3 months correlation between Varun and Procter is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Varun Beverages Limited 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 Varun Beverages 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 Varun Beverages Limited 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 Varun Beverages i.e., Varun Beverages and Procter Gamble go up and down completely randomly.

Pair Corralation between Varun Beverages and Procter Gamble

Assuming the 90 days trading horizon Varun Beverages Limited is expected to under-perform the Procter Gamble. In addition to that, Varun Beverages is 1.33 times more volatile than Procter Gamble Health. It trades about -0.23 of its total potential returns per unit of risk. Procter Gamble Health is currently generating about 0.0 per unit of volatility. If you would invest  509,544  in Procter Gamble Health on December 2, 2024 and sell it today you would lose (6,139) from holding Procter Gamble Health or give up 1.2% of portfolio value over 90 days.

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

Varun Beverages Limited  vs.  Procter Gamble Health

Varun Beverages

Risk-Adjusted Performance

Very Weak

Over the last 90 days Varun Beverages Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Procter Gamble Health

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Varun Beverages and Procter Gamble

The main advantage of trading using opposite Varun Beverages and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varun Beverages 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 Varun Beverages Limited 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 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.