Correlation Between 360 Finance and Coca Cola

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Can any of the company-specific risk be diversified away by investing in both 360 Finance 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 360 Finance and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 360 Finance and Coca Cola HBC, you can compare the effects of market volatilities on 360 Finance 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 360 Finance with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of 360 Finance and Coca Cola.

Diversification Opportunities for 360 Finance and Coca Cola

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between 360 and Coca is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding 360 Finance and Coca Cola HBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola HBC and 360 Finance 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 360 Finance 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 HBC has no effect on the direction of 360 Finance i.e., 360 Finance and Coca Cola go up and down completely randomly.

Pair Corralation between 360 Finance and Coca Cola

Given the investment horizon of 90 days 360 Finance is expected to generate 1.36 times less return on investment than Coca Cola. In addition to that, 360 Finance is 2.23 times more volatile than Coca Cola HBC. It trades about 0.06 of its total potential returns per unit of risk. Coca Cola HBC is currently generating about 0.17 per unit of volatility. If you would invest  2,290  in Coca Cola HBC on October 4, 2024 and sell it today you would earn a total of  773.00  from holding Coca Cola HBC or generate 33.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy26.61%
ValuesDaily Returns

360 Finance  vs.  Coca Cola HBC

 Performance 
       Timeline  
360 Finance 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in 360 Finance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, 360 Finance displayed solid returns over the last few months and may actually be approaching a breakup point.
Coca Cola HBC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Coca Cola HBC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Coca Cola is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

360 Finance and Coca Cola Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 360 Finance and Coca Cola

The main advantage of trading using opposite 360 Finance and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 360 Finance 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 360 Finance and Coca Cola HBC 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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