Correlation Between Sigma Lithium and Procter Gamble

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Can any of the company-specific risk be diversified away by investing in both Sigma Lithium 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 Sigma Lithium and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sigma Lithium Corp and Procter Gamble, you can compare the effects of market volatilities on Sigma Lithium 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 Sigma Lithium with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sigma Lithium and Procter Gamble.

Diversification Opportunities for Sigma Lithium and Procter Gamble

-0.13
  Correlation Coefficient

Good diversification

The 3 months correlation between Sigma and Procter is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sigma Lithium Corp and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Sigma Lithium 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 Sigma Lithium Corp 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 Sigma Lithium i.e., Sigma Lithium and Procter Gamble go up and down completely randomly.

Pair Corralation between Sigma Lithium and Procter Gamble

Given the investment horizon of 90 days Sigma Lithium Corp is expected to generate 3.23 times more return on investment than Procter Gamble. However, Sigma Lithium is 3.23 times more volatile than Procter Gamble. It trades about 0.12 of its potential returns per unit of risk. Procter Gamble is currently generating about 0.01 per unit of risk. If you would invest  950.00  in Sigma Lithium Corp on August 31, 2022 and sell it today you would earn a total of  2,222  from holding Sigma Lithium Corp or generate 233.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sigma Lithium Corp  vs.  Procter Gamble

 Performance (%) 
       Timeline  
Sigma Lithium Corp 
Sigma Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Sigma Lithium Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Sigma Lithium revealed solid returns over the last few months and may actually be approaching a breakup point.

Sigma Price Channel

Procter Gamble 
Procter Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Procter Gamble may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Procter Price Channel

Sigma Lithium and Procter Gamble Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sigma Lithium and Procter Gamble

The main advantage of trading using opposite Sigma Lithium and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sigma Lithium 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.
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The idea behind Sigma Lithium Corp and Procter Gamble 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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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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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