Correlation Between Patria Investments and Coca Cola

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

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

Diversification Opportunities for Patria Investments and Coca Cola

-0.16

Correlation Coefficient

Patria Investments  Coca Cola

Good diversification

The 3 months correlation between Patria and Coca is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Patria Investments Limited and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Patria Investments 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 Patria Investments Limited 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 has no effect on the direction of Patria Investments i.e., Patria Investments and Coca Cola go up and down completely randomly.

Pair Corralation between Patria Investments and Coca Cola

Assuming the 90 days trading horizon Patria Investments is expected to generate 2.64 times less return on investment than Coca Cola. In addition to that, Patria Investments is 1.22 times more volatile than The Coca Cola. It trades about 0.02 of its total potential returns per unit of risk. The Coca Cola is currently generating about 0.05 per unit of volatility. If you would invest  5,018  in The Coca Cola on October 5, 2024 and sell it today you would earn a total of  1,326  from holding The Coca Cola or generate 26.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.79%
Values	Daily Returns

Patria Investments Limited  vs.  The Coca Cola

Patria Investments

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Investments Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Patria Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Coca Cola

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Coca Cola are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Coca Cola is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Patria Investments and Coca Cola

The main advantage of trading using opposite Patria Investments and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patria Investments 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 Patria Investments Limited and The Coca Cola 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.