Correlation Between Continental Beverage and First Colombia

Can any of the company-specific risk be diversified away by investing in both Continental Beverage and First Colombia 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 Continental Beverage and First Colombia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Continental Beverage Brands and First Colombia Gold, you can compare the effects of market volatilities on Continental Beverage and First Colombia 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 Continental Beverage with a short position of First Colombia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Beverage and First Colombia.

Diversification Opportunities for Continental Beverage and First Colombia

0.0

Correlation Coefficient

Continental Beverage  First Colombia

Pay attention - limited upside

The 3 months correlation between Continental and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Continental Beverage Brands and First Colombia Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Colombia Gold and Continental Beverage 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 Continental Beverage Brands are associated (or correlated) with First Colombia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Colombia Gold has no effect on the direction of Continental Beverage i.e., Continental Beverage and First Colombia go up and down completely randomly.

Pair Corralation between Continental Beverage and First Colombia

If you would invest  0.00  in First Colombia Gold on December 30, 2024 and sell it today you would earn a total of  0.01  from holding First Colombia Gold or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Continental Beverage Brands  vs.  First Colombia Gold

Continental Beverage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Continental Beverage Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Continental Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Colombia Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Colombia Gold are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, First Colombia exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Continental Beverage and First Colombia

The main advantage of trading using opposite Continental Beverage and First Colombia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Beverage position performs unexpectedly, First Colombia 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 First Colombia will offset losses from the drop in First Colombia's long position.

The idea behind Continental Beverage Brands and First Colombia Gold 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.