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
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pampa and Coca is -0.88. 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 generate 0.98 times more return on investment than Coca Cola. However, Pampa Energia SA is 1.02 times less risky than Coca Cola. It trades about 0.73 of its potential returns per unit of risk. The Coca Cola is currently generating about -0.22 per unit of risk. If you would invest 308,000 in Pampa Energia SA on August 30, 2024 and sell it today you would earn a total of 65,000 from holding Pampa Energia SA or generate 21.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| 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. Compania de Transporte | Pampa Energia vs. Harmony Gold Mining | Pampa Energia vs. Transportadora de Gas | Pampa Energia vs. Agrometal SAI |
| Coca Cola vs. Harmony Gold Mining | Coca Cola vs. Compania de Transporte | Coca Cola vs. Agrometal SAI | Coca Cola vs. Transportadora de Gas |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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