Correlation Between Compania and Coca Cola

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

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

Diversification Opportunities for Compania and Coca Cola

0.0

Correlation Coefficient

Compania  Coca Cola

Pay attention - limited upside

The 3 months correlation between Compania and Coca is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Transporte and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Compania 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 Compania de Transporte 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 Compania i.e., Compania and Coca Cola go up and down completely randomly.

Pair Corralation between Compania and Coca Cola

If you would invest  186,000  in Compania de Transporte on October 27, 2024 and sell it today you would earn a total of  83,000  from holding Compania de Transporte or generate 44.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Compania de Transporte  vs.  The Coca Cola

Compania de Transporte

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compania de Transporte are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compania sustained solid returns over the last few months and may actually be approaching a breakup point.

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. 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.

Pair Trading with Compania and Coca Cola

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

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.