Correlation Between Procter Gamble and WuXi Biologics
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and WuXi Biologics 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 WuXi Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and WuXi Biologics, you can compare the effects of market volatilities on Procter Gamble and WuXi Biologics 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 WuXi Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and WuXi Biologics.
Diversification Opportunities for Procter Gamble and WuXi Biologics
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Procter and WuXi is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and WuXi Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi Biologics 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 WuXi Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi Biologics has no effect on the direction of Procter Gamble i.e., Procter Gamble and WuXi Biologics go up and down completely randomly.
Pair Corralation between Procter Gamble and WuXi Biologics
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.18 times more return on investment than WuXi Biologics. However, Procter Gamble is 5.47 times less risky than WuXi Biologics. It trades about 0.09 of its potential returns per unit of risk. WuXi Biologics is currently generating about -0.04 per unit of risk. If you would invest 14,038 in Procter Gamble on September 4, 2024 and sell it today you would earn a total of 3,932 from holding Procter Gamble or generate 28.01% 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. WuXi Biologics
Performance |
| Timeline |
| Procter Gamble |
| WuXi Biologics |
Procter Gamble and WuXi Biologics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and WuXi Biologics
The main advantage of trading using opposite Procter Gamble and WuXi Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, WuXi Biologics 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 WuXi Biologics will offset losses from the drop in WuXi Biologics' long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies |
| WuXi Biologics vs. Therapeutic Solutions International | WuXi Biologics vs. Alpha Cognition | WuXi Biologics vs. Vg Life Sciences | WuXi Biologics vs. Adagene |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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