Correlation Between Coca Cola and Cresud Wnt

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Can any of the company-specific risk be diversified away by investing in both Coca Cola and Cresud Wnt 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 and Cresud Wnt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Coca Cola and Cresud Wnt, you can compare the effects of market volatilities on Coca Cola and Cresud Wnt 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 with a short position of Cresud Wnt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Cresud Wnt.

Diversification Opportunities for Coca Cola and Cresud Wnt

-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Coca and Cresud is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Cresud Wnt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresud Wnt and Coca Cola 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 The Coca Cola are associated (or correlated) with Cresud Wnt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresud Wnt has no effect on the direction of Coca Cola i.e., Coca Cola and Cresud Wnt go up and down completely randomly.

Pair Corralation between Coca Cola and Cresud Wnt

Assuming the 90 days horizon The Coca Cola is expected to under-perform the Cresud Wnt. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 3.23 times less risky than Cresud Wnt. The stock trades about -0.08 of its potential returns per unit of risk. The Cresud Wnt is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  67,200  in Cresud Wnt on October 24, 2024 and sell it today you would earn a total of  67,800  from holding Cresud Wnt or generate 100.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

The Coca Cola  vs.  Cresud Wnt

 Performance 
       Timeline  
Coca Cola 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days The Coca Cola has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Coca Cola is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Cresud Wnt 

Risk-Adjusted Performance

23 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Cresud Wnt are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Cresud Wnt sustained solid returns over the last few months and may actually be approaching a breakup point.

Coca Cola and Cresud Wnt Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coca Cola and Cresud Wnt

The main advantage of trading using opposite Coca Cola and Cresud Wnt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Cresud Wnt 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 Cresud Wnt will offset losses from the drop in Cresud Wnt's long position.
The idea behind The Coca Cola and Cresud Wnt 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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