Correlation Between Grupo Carso and Procter Gamble

Can any of the company-specific risk be diversified away by investing in both Grupo Carso 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 Grupo Carso and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grupo Carso SAB and Procter Gamble DRC, you can compare the effects of market volatilities on Grupo Carso 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 Grupo Carso with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Carso and Procter Gamble.

Diversification Opportunities for Grupo Carso and Procter Gamble

-0.13

Correlation Coefficient

Grupo Carso  Procter Gamble

Good diversification

The 3 months correlation between Grupo and Procter is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and Procter Gamble DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble DRC and Grupo Carso 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 Grupo Carso SAB 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 DRC has no effect on the direction of Grupo Carso i.e., Grupo Carso and Procter Gamble go up and down completely randomly.

Pair Corralation between Grupo Carso and Procter Gamble

Assuming the 90 days trading horizon Grupo Carso SAB is expected to under-perform the Procter Gamble. In addition to that, Grupo Carso is 1.48 times more volatile than Procter Gamble DRC. It trades about -0.06 of its total potential returns per unit of risk. Procter Gamble DRC is currently generating about 0.11 per unit of volatility. If you would invest  329,083  in Procter Gamble DRC on September 13, 2024 and sell it today you would earn a total of  18,917  from holding Procter Gamble DRC or generate 5.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Grupo Carso SAB  vs.  Procter Gamble DRC

Grupo Carso SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Grupo Carso is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Procter Gamble DRC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble DRC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Procter Gamble is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grupo Carso and Procter Gamble

The main advantage of trading using opposite Grupo Carso and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Carso 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.

The idea behind Grupo Carso SAB and Procter Gamble DRC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.