Correlation Between LASSONDE INDUSTINC and Coca Cola
Can any of the company-specific risk be diversified away by investing in both LASSONDE INDUSTINC and Coca Cola 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 LASSONDE INDUSTINC and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LASSONDE INDUSTINC A and Coca Cola FEMSA SAB, you can compare the effects of market volatilities on LASSONDE INDUSTINC and Coca Cola 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 LASSONDE INDUSTINC with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of LASSONDE INDUSTINC and Coca Cola.
Diversification Opportunities for LASSONDE INDUSTINC and Coca Cola
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LASSONDE and Coca is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding LASSONDE INDUSTINC A and Coca Cola FEMSA SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola FEMSA and LASSONDE INDUSTINC 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 LASSONDE INDUSTINC A are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola FEMSA has no effect on the direction of LASSONDE INDUSTINC i.e., LASSONDE INDUSTINC and Coca Cola go up and down completely randomly.
Pair Corralation between LASSONDE INDUSTINC and Coca Cola
Assuming the 90 days horizon LASSONDE INDUSTINC A is expected to generate 0.86 times more return on investment than Coca Cola. However, LASSONDE INDUSTINC A is 1.16 times less risky than Coca Cola. It trades about 0.06 of its potential returns per unit of risk. Coca Cola FEMSA SAB is currently generating about -0.06 per unit of risk. If you would invest 11,302 in LASSONDE INDUSTINC A on August 31, 2024 and sell it today you would earn a total of 298.00 from holding LASSONDE INDUSTINC A or generate 2.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LASSONDE INDUSTINC A vs. Coca Cola FEMSA SAB
Performance |
| Timeline |
| LASSONDE INDUSTINC |
| Coca Cola FEMSA |
LASSONDE INDUSTINC and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LASSONDE INDUSTINC and Coca Cola
The main advantage of trading using opposite LASSONDE INDUSTINC and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LASSONDE INDUSTINC position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.The idea behind LASSONDE INDUSTINC A and Coca Cola FEMSA SAB 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 the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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