Correlation Between Expat Czech and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Expat Czech 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 Expat Czech and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Expat Czech PX and Coca Cola FEMSA SAB, you can compare the effects of market volatilities on Expat Czech 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 Expat Czech with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expat Czech and Coca Cola.
Diversification Opportunities for Expat Czech and Coca Cola
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Expat and Coca is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Expat Czech PX 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 Expat Czech 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 Expat Czech PX 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 Expat Czech i.e., Expat Czech and Coca Cola go up and down completely randomly.
Pair Corralation between Expat Czech and Coca Cola
Assuming the 90 days trading horizon Expat Czech is expected to generate 10.0 times less return on investment than Coca Cola. But when comparing it to its historical volatility, Expat Czech PX is 22.03 times less risky than Coca Cola. It trades about 0.09 of its potential returns per unit of risk. Coca Cola FEMSA SAB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 800.00 in Coca Cola FEMSA SAB on September 2, 2024 and sell it today you would lose (75.00) from holding Coca Cola FEMSA SAB or give up 9.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Expat Czech PX vs. Coca Cola FEMSA SAB
Performance |
| Timeline |
| Expat Czech PX |
| Coca Cola FEMSA |
Expat Czech and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Expat Czech and Coca Cola
The main advantage of trading using opposite Expat Czech and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expat Czech 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.| Expat Czech vs. Expat Croatia Crobex | Expat Czech vs. Expat Serbia Belex15 | Expat Czech vs. Expat Poland WIG20 | Expat Czech vs. Expat Slovenia SBI |
| Coca Cola vs. Charter Communications | Coca Cola vs. International Consolidated Airlines | Coca Cola vs. Entravision Communications | Coca Cola vs. Computershare Limited |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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