How to know if two stocks move togheter?

Question

Hello,

I have two stocks with their prices, example:

STOCK1:

10.56

11.23

12.32

8.90

STOCK2:

1.26

5.80

3.26

10.3

I only found Pearson correlation, but, is there another method to know if two stocks move togheter? (esample: co-integration??)

Thank you so much!

Answer 1

I would try a rank correlation like a Spearman or Kendall correlation coefficient. They are good to use because Pearson is more for detecting linear correlations while rank correlations just detect if one seems to go up while the other goes up or one seems to go up while the other goes down. I've only used the Spearman correlation coefficient myself.