Correlation Between Procter Gamble and KraneShares Asia
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and KraneShares Asia 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 KraneShares Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and KraneShares Asia Pacific, you can compare the effects of market volatilities on Procter Gamble and KraneShares Asia 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 KraneShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and KraneShares Asia.
Diversification Opportunities for Procter Gamble and KraneShares Asia
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and KraneShares is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and KraneShares Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Asia Pacific 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 KraneShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Asia Pacific has no effect on the direction of Procter Gamble i.e., Procter Gamble and KraneShares Asia go up and down completely randomly.
Pair Corralation between Procter Gamble and KraneShares Asia
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 4.39 times more return on investment than KraneShares Asia. However, Procter Gamble is 4.39 times more volatile than KraneShares Asia Pacific. It trades about 0.09 of its potential returns per unit of risk. KraneShares Asia Pacific is currently generating about 0.23 per unit of risk. If you would invest 14,228 in Procter Gamble on September 4, 2024 and sell it today you would earn a total of 3,314 from holding Procter Gamble or generate 23.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. KraneShares Asia Pacific
Performance |
| Timeline |
| Procter Gamble |
| KraneShares Asia Pacific |
Procter Gamble and KraneShares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and KraneShares Asia
The main advantage of trading using opposite Procter Gamble and KraneShares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, KraneShares Asia 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 KraneShares Asia will offset losses from the drop in KraneShares Asia's long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies |
| KraneShares Asia vs. iShares iBoxx Investment | KraneShares Asia vs. iShares iBoxx High | KraneShares Asia vs. iShares National Muni | KraneShares Asia vs. Invesco Emerging Markets |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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