Correlation Between Coca Cola and Distribuidora
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Distribuidora 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 Coca Cola and Distribuidora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Coca Cola and Distribuidora de Gas, you can compare the effects of market volatilities on Coca Cola and Distribuidora 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 Coca Cola with a short position of Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Distribuidora.
Diversification Opportunities for Coca Cola and Distribuidora
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and Distribuidora is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Distribuidora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distribuidora de Gas and Coca Cola 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 The Coca Cola are associated (or correlated) with Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distribuidora de Gas has no effect on the direction of Coca Cola i.e., Coca Cola and Distribuidora go up and down completely randomly.
Pair Corralation between Coca Cola and Distribuidora
Assuming the 90 days horizon The Coca Cola is expected to under-perform the Distribuidora. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 2.3 times less risky than Distribuidora. The stock trades about -0.27 of its potential returns per unit of risk. The Distribuidora de Gas is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 141,000 in Distribuidora de Gas on August 29, 2024 and sell it today you would earn a total of 49,000 from holding Distribuidora de Gas or generate 34.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Distribuidora de Gas
Performance |
| Timeline |
| Coca Cola |
| Distribuidora de Gas |
Coca Cola and Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Distribuidora
The main advantage of trading using opposite Coca Cola and Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Distribuidora 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 Distribuidora will offset losses from the drop in Distribuidora's long position.| Coca Cola vs. Harmony Gold Mining | Coca Cola vs. Compania de Transporte | Coca Cola vs. Agrometal SAI | Coca Cola vs. Transportadora de Gas |
| Distribuidora vs. Harmony Gold Mining | Distribuidora vs. Compania de Transporte | Distribuidora vs. Agrometal SAI |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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