Correlation Between Compagnie Plastic and Coca Cola

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

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

Diversification Opportunities for Compagnie Plastic and Coca Cola

-0.01

Correlation Coefficient

Compagnie Plastic  Coca Cola

Good diversification

The 3 months correlation between Compagnie and Coca is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and Coca Cola HBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola HBC and Compagnie Plastic 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 Compagnie Plastic Omnium 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 HBC has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and Coca Cola go up and down completely randomly.

Pair Corralation between Compagnie Plastic and Coca Cola

Assuming the 90 days horizon Compagnie Plastic Omnium is expected to under-perform the Coca Cola. In addition to that, Compagnie Plastic is 1.51 times more volatile than Coca Cola HBC. It trades about -0.02 of its total potential returns per unit of risk. Coca Cola HBC is currently generating about 0.21 per unit of volatility. If you would invest  3,294  in Coca Cola HBC on December 29, 2024 and sell it today you would earn a total of  798.00  from holding Coca Cola HBC or generate 24.23% return on investment over 90 days.

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

Compagnie Plastic Omnium  vs.  Coca Cola HBC

Compagnie Plastic Omnium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compagnie Plastic Omnium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Compagnie Plastic is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Coca Cola HBC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola HBC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Coca Cola reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compagnie Plastic and Coca Cola

The main advantage of trading using opposite Compagnie Plastic and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic 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 Compagnie Plastic Omnium and Coca Cola HBC 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.