Correlation Between Coca Cola and Quadro Acquisition

Can any of the company-specific risk be diversified away by investing in both Coca Cola and Quadro Acquisition 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 Quadro Acquisition 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 Quadro Acquisition One, you can compare the effects of market volatilities on Coca Cola and Quadro Acquisition 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 Quadro Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Quadro Acquisition.

Diversification Opportunities for Coca Cola and Quadro Acquisition

-0.83

Correlation Coefficient

Coca Cola  Quadro Acquisition

Pay attention - limited upside

The 3 months correlation between Coca and Quadro is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Quadro Acquisition One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quadro Acquisition One 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 Quadro Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quadro Acquisition One has no effect on the direction of Coca Cola i.e., Coca Cola and Quadro Acquisition go up and down completely randomly.

Pair Corralation between Coca Cola and Quadro Acquisition

Allowing for the 90-day total investment horizon Coca Cola is expected to generate 2.01 times less return on investment than Quadro Acquisition. In addition to that, Coca Cola is 4.88 times more volatile than Quadro Acquisition One. It trades about 0.02 of its total potential returns per unit of risk. Quadro Acquisition One is currently generating about 0.17 per unit of volatility. If you would invest  1,020  in Quadro Acquisition One on September 4, 2024 and sell it today you would earn a total of  31.00  from holding Quadro Acquisition One or generate 3.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	21.21%
Values	Daily Returns

The Coca Cola  vs.  Quadro Acquisition One

Coca Cola

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Coca Cola has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Quadro Acquisition One

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quadro Acquisition One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Quadro Acquisition is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Coca Cola and Quadro Acquisition

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

The idea behind The Coca Cola and Quadro Acquisition One 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.