Correlation Between First Colombia and Continental Beverage

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

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

Diversification Opportunities for First Colombia and Continental Beverage

0.0

Correlation Coefficient

First Colombia  Continental Beverage

Pay attention - limited upside

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

Pair Corralation between First Colombia and Continental Beverage

If you would invest  0.01  in First Colombia Gold on December 1, 2024 and sell it today you would earn a total of  0.00  from holding First Colombia Gold or generate 0.0% return on investment over 90 days.

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

First Colombia Gold  vs.  Continental Beverage Brands

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 25 (%) 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.

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.

Pair Trading with First Colombia and Continental Beverage

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

The idea behind First Colombia Gold and Continental Beverage Brands 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.