Correlation Between Kofola CeskoSlovensko and Philip Morris
Can any of the company-specific risk be diversified away by investing in both Kofola CeskoSlovensko and Philip Morris 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 Kofola CeskoSlovensko and Philip Morris into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kofola CeskoSlovensko as and Philip Morris CR, you can compare the effects of market volatilities on Kofola CeskoSlovensko and Philip Morris 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 Kofola CeskoSlovensko with a short position of Philip Morris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kofola CeskoSlovensko and Philip Morris.
Diversification Opportunities for Kofola CeskoSlovensko and Philip Morris
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kofola and Philip is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Kofola CeskoSlovensko as and Philip Morris CR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philip Morris CR and Kofola CeskoSlovensko 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 Kofola CeskoSlovensko as are associated (or correlated) with Philip Morris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philip Morris CR has no effect on the direction of Kofola CeskoSlovensko i.e., Kofola CeskoSlovensko and Philip Morris go up and down completely randomly.
Pair Corralation between Kofola CeskoSlovensko and Philip Morris
Assuming the 90 days trading horizon Kofola CeskoSlovensko as is expected to generate 2.24 times more return on investment than Philip Morris. However, Kofola CeskoSlovensko is 2.24 times more volatile than Philip Morris CR. It trades about 0.5 of its potential returns per unit of risk. Philip Morris CR is currently generating about -0.02 per unit of risk. If you would invest 33,600 in Kofola CeskoSlovensko as on August 28, 2024 and sell it today you would earn a total of 4,600 from holding Kofola CeskoSlovensko as or generate 13.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kofola CeskoSlovensko as vs. Philip Morris CR
Performance |
| Timeline |
| Kofola CeskoSlovensko |
| Philip Morris CR |
Kofola CeskoSlovensko and Philip Morris Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kofola CeskoSlovensko and Philip Morris
The main advantage of trading using opposite Kofola CeskoSlovensko and Philip Morris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kofola CeskoSlovensko position performs unexpectedly, Philip Morris 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 Philip Morris will offset losses from the drop in Philip Morris' long position.| Kofola CeskoSlovensko vs. Moneta Money Bank | Kofola CeskoSlovensko vs. Komercni Banka AS | Kofola CeskoSlovensko vs. Cez AS | Kofola CeskoSlovensko vs. Erste Group Bank |
| Philip Morris vs. Cez AS | Philip Morris vs. HARDWARIO as | Philip Morris vs. Prabos Plus as | Philip Morris vs. Kofola CeskoSlovensko as |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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