Correlation Between CM Hospitalar and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both CM Hospitalar 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 CM Hospitalar and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CM Hospitalar SA and The Procter Gamble, you can compare the effects of market volatilities on CM Hospitalar 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 CM Hospitalar with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of CM Hospitalar and Procter Gamble.
Diversification Opportunities for CM Hospitalar and Procter Gamble
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VVEO3 and Procter is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding CM Hospitalar SA and The Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and CM Hospitalar 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 CM Hospitalar SA 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 has no effect on the direction of CM Hospitalar i.e., CM Hospitalar and Procter Gamble go up and down completely randomly.
Pair Corralation between CM Hospitalar and Procter Gamble
Assuming the 90 days trading horizon CM Hospitalar SA is expected to under-perform the Procter Gamble. In addition to that, CM Hospitalar is 2.73 times more volatile than The Procter Gamble. It trades about -0.1 of its total potential returns per unit of risk. The Procter Gamble is currently generating about 0.05 per unit of volatility. If you would invest 5,039 in The Procter Gamble on October 25, 2024 and sell it today you would earn a total of 1,933 from holding The Procter Gamble or generate 38.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CM Hospitalar SA vs. The Procter Gamble
Performance |
| Timeline |
| CM Hospitalar SA |
| Procter Gamble |
CM Hospitalar and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CM Hospitalar and Procter Gamble
The main advantage of trading using opposite CM Hospitalar and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CM Hospitalar 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.| CM Hospitalar vs. Clover Health Investments, | CM Hospitalar vs. Take Two Interactive Software | CM Hospitalar vs. G2D Investments | CM Hospitalar vs. Applied Materials, |
| Procter Gamble vs. Raytheon Technologies | Procter Gamble vs. BIONTECH SE DRN | Procter Gamble vs. Burlington Stores, | Procter Gamble vs. Trane Technologies plc |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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