Correlation Between FATFISH GROUP and Coca Cola

Can any of the company-specific risk be diversified away by investing in both FATFISH GROUP 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 FATFISH GROUP and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FATFISH GROUP LTD and The Coca Cola, you can compare the effects of market volatilities on FATFISH GROUP 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 FATFISH GROUP with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of FATFISH GROUP and Coca Cola.

Diversification Opportunities for FATFISH GROUP and Coca Cola

-0.41

Correlation Coefficient

FATFISH GROUP  Coca Cola

Very good diversification

The 3 months correlation between FATFISH and Coca is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding FATFISH GROUP LTD and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and FATFISH GROUP 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 FATFISH GROUP LTD 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 FATFISH GROUP i.e., FATFISH GROUP and Coca Cola go up and down completely randomly.

Pair Corralation between FATFISH GROUP and Coca Cola

Assuming the 90 days horizon FATFISH GROUP LTD is expected to under-perform the Coca Cola. In addition to that, FATFISH GROUP is 9.97 times more volatile than The Coca Cola. It trades about -0.18 of its total potential returns per unit of risk. The Coca Cola is currently generating about -0.03 per unit of volatility. If you would invest  6,077  in The Coca Cola on September 23, 2024 and sell it today you would lose (33.00) from holding The Coca Cola or give up 0.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

FATFISH GROUP LTD  vs.  The Coca Cola

FATFISH GROUP LTD

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FATFISH GROUP LTD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FATFISH GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Coca Cola

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Coca Cola has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Coca Cola is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FATFISH GROUP and Coca Cola

The main advantage of trading using opposite FATFISH GROUP and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FATFISH GROUP 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.

The idea behind FATFISH GROUP LTD and The Coca Cola pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.