Correlation Between CLPS and Coca Cola
Can any of the company-specific risk be diversified away by investing in both CLPS 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 CLPS and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CLPS Inc and The Coca Cola, you can compare the effects of market volatilities on CLPS 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 CLPS with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLPS and Coca Cola.
Diversification Opportunities for CLPS and Coca Cola
Very weak diversification
The 3 months correlation between CLPS and Coca is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding CLPS Inc and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and CLPS 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 CLPS Inc 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 CLPS i.e., CLPS and Coca Cola go up and down completely randomly.
Pair Corralation between CLPS and Coca Cola
Given the investment horizon of 90 days CLPS Inc is expected to generate 2.85 times more return on investment than Coca Cola. However, CLPS is 2.85 times more volatile than The Coca Cola. It trades about 0.21 of its potential returns per unit of risk. The Coca Cola is currently generating about -0.07 per unit of risk. If you would invest 116.00 in CLPS Inc on October 26, 2024 and sell it today you would earn a total of 10.00 from holding CLPS Inc or generate 8.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CLPS Inc vs. The Coca Cola
Performance |
| Timeline |
| CLPS Inc |
| Coca Cola |
CLPS and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CLPS and Coca Cola
The main advantage of trading using opposite CLPS and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CLPS 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 CLPS Inc and The Coca Cola 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.| Coca Cola vs. PepsiCo | Coca Cola vs. Vita Coco | Coca Cola vs. Aquagold International | Coca Cola vs. Thrivent High Yield |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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