Correlation Between Coles and Alternative Investment

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

By analyzing existing cross correlation between Coles Group and Alternative Investment Trust, you can compare the effects of market volatilities on Coles and Alternative Investment 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 Coles with a short position of Alternative Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coles and Alternative Investment.

Diversification Opportunities for Coles and Alternative Investment

0.73

Correlation Coefficient

Coles  Alternative Investment

Poor diversification

The 3 months correlation between Coles and Alternative is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Coles Group and Alternative Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Investment and Coles 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 Coles Group are associated (or correlated) with Alternative Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Investment has no effect on the direction of Coles i.e., Coles and Alternative Investment go up and down completely randomly.

Pair Corralation between Coles and Alternative Investment

Assuming the 90 days trading horizon Coles Group is expected to generate 0.69 times more return on investment than Alternative Investment. However, Coles Group is 1.45 times less risky than Alternative Investment. It trades about 0.17 of its potential returns per unit of risk. Alternative Investment Trust is currently generating about 0.1 per unit of risk. If you would invest  1,888  in Coles Group on December 2, 2024 and sell it today you would earn a total of  110.00  from holding Coles Group or generate 5.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Coles Group  vs.  Alternative Investment Trust

Coles Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coles Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Coles may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Alternative Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alternative Investment Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alternative Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Coles and Alternative Investment

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

The idea behind Coles Group and Alternative Investment Trust 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.