Correlation Between Pampa Energia and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Pampa Energia 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 Pampa Energia and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pampa Energia SA and The Coca Cola, you can compare the effects of market volatilities on Pampa Energia 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 Pampa Energia with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pampa Energia and Coca Cola.
Diversification Opportunities for Pampa Energia and Coca Cola
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Pampa and Coca is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Pampa Energia 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 Pampa Energia 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 Pampa Energia 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 Pampa Energia i.e., Pampa Energia and Coca Cola go up and down completely randomly.
Pair Corralation between Pampa Energia and Coca Cola
Assuming the 90 days trading horizon Pampa Energia SA is expected to under-perform the Coca Cola. In addition to that, Pampa Energia is 2.14 times more volatile than The Coca Cola. It trades about -0.02 of its total potential returns per unit of risk. The Coca Cola is currently generating about 0.13 per unit of volatility. If you would invest 1,455,000 in The Coca Cola on November 2, 2024 and sell it today you would earn a total of 55,000 from holding The Coca Cola or generate 3.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pampa Energia SA vs. The Coca Cola
Performance |
| Timeline |
| Pampa Energia SA |
| Coca Cola |
Pampa Energia and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pampa Energia and Coca Cola
The main advantage of trading using opposite Pampa Energia and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pampa Energia 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.| Pampa Energia vs. Transportadora de Gas | Pampa Energia vs. Compania de Transporte | Pampa Energia vs. United States Steel | Pampa Energia vs. Harmony Gold Mining |
| Coca Cola vs. Grimoldi SA | Coca Cola vs. Transportadora de Gas | Coca Cola vs. Alphabet Inc Class A CEDEAR | Coca Cola vs. International Business Machines |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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