Correlation Between CITIC Telecom and Coca-Cola FEMSA
Can any of the company-specific risk be diversified away by investing in both CITIC Telecom and Coca-Cola FEMSA 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 CITIC Telecom and Coca-Cola FEMSA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITIC Telecom International and Coca Cola FEMSA SAB, you can compare the effects of market volatilities on CITIC Telecom and Coca-Cola FEMSA 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 CITIC Telecom with a short position of Coca-Cola FEMSA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Telecom and Coca-Cola FEMSA.
Diversification Opportunities for CITIC Telecom and Coca-Cola FEMSA
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CITIC and Coca-Cola is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International 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 CITIC Telecom 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 CITIC Telecom International are associated (or correlated) with Coca-Cola FEMSA. 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 CITIC Telecom i.e., CITIC Telecom and Coca-Cola FEMSA go up and down completely randomly.
Pair Corralation between CITIC Telecom and Coca-Cola FEMSA
Assuming the 90 days horizon CITIC Telecom International is expected to generate 0.97 times more return on investment than Coca-Cola FEMSA. However, CITIC Telecom International is 1.03 times less risky than Coca-Cola FEMSA. It trades about 0.08 of its potential returns per unit of risk. Coca Cola FEMSA SAB is currently generating about 0.02 per unit of risk. If you would invest 26.00 in CITIC Telecom International on September 13, 2024 and sell it today you would earn a total of 1.00 from holding CITIC Telecom International or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITIC Telecom International vs. Coca Cola FEMSA SAB
Performance |
| Timeline |
| CITIC Telecom Intern |
| Coca Cola FEMSA |
CITIC Telecom and Coca-Cola FEMSA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC Telecom and Coca-Cola FEMSA
The main advantage of trading using opposite CITIC Telecom and Coca-Cola FEMSA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Telecom position performs unexpectedly, Coca-Cola FEMSA 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 FEMSA will offset losses from the drop in Coca-Cola FEMSA's long position.| CITIC Telecom vs. Superior Plus Corp | CITIC Telecom vs. SIVERS SEMICONDUCTORS AB | CITIC Telecom vs. Norsk Hydro ASA | CITIC Telecom vs. Reliance Steel Aluminum |
| Coca-Cola FEMSA vs. Xenia Hotels Resorts | Coca-Cola FEMSA vs. RETAIL FOOD GROUP | Coca-Cola FEMSA vs. Host Hotels Resorts | Coca-Cola FEMSA vs. Summit Hotel Properties |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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