Correlation Between Central Puerto and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Central Puerto 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 Central Puerto and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Puerto SA and The Coca Cola, you can compare the effects of market volatilities on Central Puerto 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 Central Puerto with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Puerto and Coca Cola.
Diversification Opportunities for Central Puerto and Coca Cola
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Central and Coca is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Central Puerto SA and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Central Puerto 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 Central Puerto SA 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 has no effect on the direction of Central Puerto i.e., Central Puerto and Coca Cola go up and down completely randomly.
Pair Corralation between Central Puerto and Coca Cola
Assuming the 90 days trading horizon Central Puerto SA is expected to under-perform the Coca Cola. In addition to that, Central Puerto is 3.58 times more volatile than The Coca Cola. It trades about -0.03 of its total potential returns per unit of risk. The Coca Cola is currently generating about 0.16 per unit of volatility. If you would invest 1,450,000 in The Coca Cola on October 20, 2024 and sell it today you would earn a total of 40,000 from holding The Coca Cola or generate 2.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Puerto SA vs. The Coca Cola
Performance |
| Timeline |
| Central Puerto SA |
| Coca Cola |
Central Puerto and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Puerto and Coca Cola
The main advantage of trading using opposite Central Puerto and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Puerto 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.| Central Puerto vs. Enel Generacion Costanera | Central Puerto vs. Edesa Holding SA | Central Puerto vs. Empresa Distribuidora Electrica |
| Coca Cola vs. American Express Co | Coca Cola vs. Ledesma SAAI | Coca Cola vs. Central Puerto SA | Coca Cola vs. Aluar Aluminio Argentino |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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