Correlation Between Coca-Cola FEMSA and Greene Concepts

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

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

Diversification Opportunities for Coca-Cola FEMSA and Greene Concepts

0.72

Correlation Coefficient

Coca-Cola FEMSA  Greene Concepts

Poor diversification

The 3 months correlation between Coca-Cola and Greene is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola FEMSA SAB and Greene Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greene Concepts and Coca-Cola FEMSA 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 Coca Cola FEMSA SAB are associated (or correlated) with Greene Concepts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greene Concepts has no effect on the direction of Coca-Cola FEMSA i.e., Coca-Cola FEMSA and Greene Concepts go up and down completely randomly.

Pair Corralation between Coca-Cola FEMSA and Greene Concepts

Assuming the 90 days horizon Coca Cola FEMSA SAB is expected to generate 0.48 times more return on investment than Greene Concepts. However, Coca Cola FEMSA SAB is 2.09 times less risky than Greene Concepts. It trades about 0.02 of its potential returns per unit of risk. Greene Concepts is currently generating about 0.01 per unit of risk. If you would invest  752.00  in Coca Cola FEMSA SAB on October 6, 2024 and sell it today you would earn a total of  21.00  from holding Coca Cola FEMSA SAB or generate 2.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.17%
Values	Daily Returns

Coca Cola FEMSA SAB  vs.  Greene Concepts

Coca Cola FEMSA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coca Cola FEMSA SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Greene Concepts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greene Concepts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Coca-Cola FEMSA and Greene Concepts

The main advantage of trading using opposite Coca-Cola FEMSA and Greene Concepts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca-Cola FEMSA position performs unexpectedly, Greene Concepts 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 Greene Concepts will offset losses from the drop in Greene Concepts' long position.

The idea behind Coca Cola FEMSA SAB and Greene Concepts 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.