Correlation Between Procter Gamble and CannaPharmaRx

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

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

Diversification Opportunities for Procter Gamble and CannaPharmaRx

-0.41

Correlation Coefficient

Procter Gamble  CannaPharmaRx

Very good diversification

The 3 months correlation between Procter and CannaPharmaRx is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and CannaPharmaRx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CannaPharmaRx 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 CannaPharmaRx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CannaPharmaRx has no effect on the direction of Procter Gamble i.e., Procter Gamble and CannaPharmaRx go up and down completely randomly.

Pair Corralation between Procter Gamble and CannaPharmaRx

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 35.85 times less return on investment than CannaPharmaRx. But when comparing it to its historical volatility, Procter Gamble is 25.72 times less risky than CannaPharmaRx. It trades about 0.09 of its potential returns per unit of risk. CannaPharmaRx is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.10  in CannaPharmaRx on September 12, 2024 and sell it today you would earn a total of  0.70  from holding CannaPharmaRx or generate 700.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Procter Gamble  vs.  CannaPharmaRx

Procter Gamble

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Procter Gamble has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Procter Gamble is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CannaPharmaRx

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CannaPharmaRx are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, CannaPharmaRx exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Procter Gamble and CannaPharmaRx

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

The idea behind Procter Gamble and CannaPharmaRx 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..