Correlation Between Nongfu Spring and Coca Cola

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

Diversification Opportunities for Nongfu Spring and Coca Cola

NongfuCocaDiversified AwayNongfuCocaDiversified Away100%
-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between Nongfu and Coca is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Nongfu Spring Co and Coca Cola FEMSA SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola FEMSA and Nongfu Spring 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 Nongfu Spring Co 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 FEMSA has no effect on the direction of Nongfu Spring i.e., Nongfu Spring and Coca Cola go up and down completely randomly.

Pair Corralation between Nongfu Spring and Coca Cola

Assuming the 90 days horizon Nongfu Spring Co is expected to generate 0.4 times more return on investment than Coca Cola. However, Nongfu Spring Co is 2.47 times less risky than Coca Cola. It trades about 0.04 of its potential returns per unit of risk. Coca Cola FEMSA SAB is currently generating about -0.05 per unit of risk. If you would invest  425.00  in Nongfu Spring Co on October 11, 2024 and sell it today you would earn a total of  17.00  from holding Nongfu Spring Co or generate 4.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy96.83%
ValuesDaily Returns

Nongfu Spring Co  vs.  Coca Cola FEMSA SAB

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-100102030
JavaScript chart by amCharts 3.21.15NNFSF COCSF
       Timeline  
Nongfu Spring 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Nongfu Spring Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Nongfu Spring is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan3.944.14.24.34.4
Coca Cola FEMSA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Coca Cola FEMSA SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan7.588.59

Nongfu Spring and Coca Cola Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-14.32-10.72-7.13-3.530.03.737.5211.3115.1 0.0120.0130.0140.0150.0160.0170.018
JavaScript chart by amCharts 3.21.15NNFSF COCSF
       Returns  

Pair Trading with Nongfu Spring and Coca Cola

The main advantage of trading using opposite Nongfu Spring and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nongfu Spring 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 Nongfu Spring Co and Coca Cola FEMSA SAB 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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