Correlation Between CPU SOFTWAREHOUSE and Coca-Cola European

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

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

Diversification Opportunities for CPU SOFTWAREHOUSE and Coca-Cola European

-0.43

Correlation Coefficient

CPU SOFTWAREHOUSE  Coca-Cola European

Very good diversification

The 3 months correlation between CPU and Coca-Cola is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding CPU SOFTWAREHOUSE and Coca Cola European Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola European and CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE are associated (or correlated) with Coca-Cola European. 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 European has no effect on the direction of CPU SOFTWAREHOUSE i.e., CPU SOFTWAREHOUSE and Coca-Cola European go up and down completely randomly.

Pair Corralation between CPU SOFTWAREHOUSE and Coca-Cola European

Assuming the 90 days trading horizon CPU SOFTWAREHOUSE is expected to under-perform the Coca-Cola European. In addition to that, CPU SOFTWAREHOUSE is 2.45 times more volatile than Coca Cola European Partners. It trades about -0.02 of its total potential returns per unit of risk. Coca Cola European Partners is currently generating about 0.06 per unit of volatility. If you would invest  6,842  in Coca Cola European Partners on October 3, 2024 and sell it today you would earn a total of  388.00  from holding Coca Cola European Partners or generate 5.67% return on investment over 90 days.

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

CPU SOFTWAREHOUSE  vs.  Coca Cola European Partners

CPU SOFTWAREHOUSE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Coca Cola European

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola European Partners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Coca-Cola European may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CPU SOFTWAREHOUSE and Coca-Cola European

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

The idea behind CPU SOFTWAREHOUSE and Coca Cola European Partners 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.