Correlation Between Procter Gamble and KGHM Polska
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and KGHM Polska 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 Procter Gamble and KGHM Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and KGHM Polska Miedz, you can compare the effects of market volatilities on Procter Gamble and KGHM Polska 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 Procter Gamble with a short position of KGHM Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and KGHM Polska.
Diversification Opportunities for Procter Gamble and KGHM Polska
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and KGHM is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and KGHM Polska Miedz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGHM Polska Miedz and Procter Gamble 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 Procter Gamble are associated (or correlated) with KGHM Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGHM Polska Miedz has no effect on the direction of Procter Gamble i.e., Procter Gamble and KGHM Polska go up and down completely randomly.
Pair Corralation between Procter Gamble and KGHM Polska
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.38 times more return on investment than KGHM Polska. However, Procter Gamble is 2.6 times less risky than KGHM Polska. It trades about 0.07 of its potential returns per unit of risk. KGHM Polska Miedz is currently generating about -0.16 per unit of risk. If you would invest 17,125 in Procter Gamble on August 26, 2024 and sell it today you would earn a total of 503.00 from holding Procter Gamble or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Procter Gamble vs. KGHM Polska Miedz
Performance |
| Timeline |
| Procter Gamble |
| KGHM Polska Miedz |
Procter Gamble and KGHM Polska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and KGHM Polska
The main advantage of trading using opposite Procter Gamble and KGHM Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, KGHM Polska 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 KGHM Polska will offset losses from the drop in KGHM Polska's long position.| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
| KGHM Polska vs. Marie Brizard Wine | KGHM Polska vs. Quantum Software SA | KGHM Polska vs. SOFTWARE MANSION SPOLKA | KGHM Polska vs. Mlk Foods Public |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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