Correlation Between Procter Gamble and Atlantic Energy

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

By analyzing existing cross correlation between Procter Gamble and Atlantic Energy Solutions, you can compare the effects of market volatilities on Procter Gamble and Atlantic Energy 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 Atlantic Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Atlantic Energy.

Diversification Opportunities for Procter Gamble and Atlantic Energy

-0.37

Correlation Coefficient

Procter Gamble  Atlantic Energy

Very good diversification

The 3 months correlation between Procter and Atlantic is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Atlantic Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Energy Solutions 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 Atlantic Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Energy Solutions has no effect on the direction of Procter Gamble i.e., Procter Gamble and Atlantic Energy go up and down completely randomly.

Pair Corralation between Procter Gamble and Atlantic Energy

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 24.69 times less return on investment than Atlantic Energy. But when comparing it to its historical volatility, Procter Gamble is 19.4 times less risky than Atlantic Energy. It trades about 0.07 of its potential returns per unit of risk. Atlantic Energy Solutions is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1.50  in Atlantic Energy Solutions on September 3, 2024 and sell it today you would earn a total of  0.08  from holding Atlantic Energy Solutions or generate 5.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.32%
Values	Daily Returns

Procter Gamble  vs.  Atlantic Energy Solutions

Procter Gamble

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Procter Gamble is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Atlantic Energy Solutions

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantic Energy Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Atlantic Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Procter Gamble and Atlantic Energy

The main advantage of trading using opposite Procter Gamble and Atlantic Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Atlantic Energy 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 Atlantic Energy will offset losses from the drop in Atlantic Energy's long position.

The idea behind Procter Gamble and Atlantic Energy Solutions 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.