Correlation Between Procter Gamble and Burcon NutraScience

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

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

Diversification Opportunities for Procter Gamble and Burcon NutraScience

-0.38

Correlation Coefficient

Procter Gamble  Burcon NutraScience

Very good diversification

The 3 months correlation between Procter and Burcon is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Burcon NutraScience Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burcon NutraScience Corp 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 Burcon NutraScience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burcon NutraScience Corp has no effect on the direction of Procter Gamble i.e., Procter Gamble and Burcon NutraScience go up and down completely randomly.

Pair Corralation between Procter Gamble and Burcon NutraScience

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.18 times more return on investment than Burcon NutraScience. However, Procter Gamble is 5.65 times less risky than Burcon NutraScience. It trades about 0.04 of its potential returns per unit of risk. Burcon NutraScience Corp is currently generating about 0.0 per unit of risk. If you would invest  13,739  in Procter Gamble on August 10, 2024 and sell it today you would earn a total of  2,602  from holding Procter Gamble or generate 18.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	11.13%
Values	Daily Returns

Procter Gamble  vs.  Burcon NutraScience Corp

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Burcon NutraScience Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Procter Gamble and Burcon NutraScience

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

The idea behind Procter Gamble and Burcon NutraScience Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.