Correlation Between Procter Gamble and Atacado SA
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Atacado SA 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 Atacado SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Procter Gamble and Atacado SA, you can compare the effects of market volatilities on Procter Gamble and Atacado SA 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 Atacado SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Atacado SA.
Diversification Opportunities for Procter Gamble and Atacado SA
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Atacado is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and Atacado SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atacado SA 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 The Procter Gamble are associated (or correlated) with Atacado SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atacado SA has no effect on the direction of Procter Gamble i.e., Procter Gamble and Atacado SA go up and down completely randomly.
Pair Corralation between Procter Gamble and Atacado SA
Assuming the 90 days trading horizon Procter Gamble is expected to generate 13.81 times less return on investment than Atacado SA. But when comparing it to its historical volatility, The Procter Gamble is 1.91 times less risky than Atacado SA. It trades about 0.04 of its potential returns per unit of risk. Atacado SA is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 605.00 in Atacado SA on November 29, 2024 and sell it today you would earn a total of 121.00 from holding Atacado SA or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Procter Gamble vs. Atacado SA
Performance |
| Timeline |
| Procter Gamble |
| Atacado SA |
Procter Gamble and Atacado SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Atacado SA
The main advantage of trading using opposite Procter Gamble and Atacado SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Atacado SA 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 Atacado SA will offset losses from the drop in Atacado SA's long position.| Procter Gamble vs. JB Hunt Transport | Procter Gamble vs. Liberty Broadband | Procter Gamble vs. Ryanair Holdings plc | Procter Gamble vs. TC Traders Club |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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