Correlation Between Procter Gamble and Micro Focus

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

Diversification Opportunities for Procter Gamble and Micro Focus

-0.74
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Procter and Micro is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Micro Focus Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Focus Intl 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 Micro Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Focus Intl has no effect on the direction of Procter Gamble i.e., Procter Gamble and Micro Focus go up and down completely randomly.

Pair Corralation between Procter Gamble and Micro Focus

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.98 times more return on investment than Micro Focus. However, Procter Gamble is 1.02 times less risky than Micro Focus. It trades about -0.2 of its potential returns per unit of risk. Micro Focus Intl is currently generating about -0.34 per unit of risk. If you would invest  14,169  in Procter Gamble on June 28, 2022 and sell it today you would lose (598.00)  from holding Procter Gamble or give up 4.22% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Procter Gamble  vs.  Micro Focus Intl

 Performance (%) 
       Timeline  
Procter Gamble 
Procter Performance
0 of 100
Over the last 90 days Procter Gamble has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Procter Gamble is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Procter Price Channel

Micro Focus Intl 
Micro Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Micro Focus Intl are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Micro Focus displayed solid returns over the last few months and may actually be approaching a breakup point.

Micro Price Channel

Procter Gamble and Micro Focus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Procter Gamble and Micro Focus

The main advantage of trading using opposite Procter Gamble and Micro Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Micro Focus 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 Micro Focus will offset losses from the drop in Micro Focus' long position.
Procter Gamble vs. Kibush Capital Corp
The idea behind Procter Gamble and Micro Focus Intl 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.
Micro Focus vs. Kibush Capital Corp
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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