Correlation Between COCA A and Uni President

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

By analyzing existing cross correlation between COCA A HBC and Uni President China Holdings, you can compare the effects of market volatilities on COCA A and Uni President 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 A with a short position of Uni President. Check out your portfolio center. Please also check ongoing floating volatility patterns of COCA A and Uni President.

Diversification Opportunities for COCA A and Uni President

0.07

Correlation Coefficient

COCA A  Uni President

Significant diversification

The 3 months correlation between COCA and Uni is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding COCA A HBC and Uni President China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uni President China and COCA A 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 COCA A HBC are associated (or correlated) with Uni President. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uni President China has no effect on the direction of COCA A i.e., COCA A and Uni President go up and down completely randomly.

Pair Corralation between COCA A and Uni President

Assuming the 90 days trading horizon COCA A is expected to generate 20.8 times less return on investment than Uni President. But when comparing it to its historical volatility, COCA A HBC is 3.59 times less risky than Uni President. It trades about 0.01 of its potential returns per unit of risk. Uni President China Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  70.00  in Uni President China Holdings on September 27, 2024 and sell it today you would earn a total of  16.00  from holding Uni President China Holdings or generate 22.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

COCA A HBC  vs.  Uni President China Holdings

COCA A HBC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COCA A HBC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, COCA A is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Uni President China

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Uni President China Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Uni President reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COCA A and Uni President

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

The idea behind COCA A HBC and Uni President China Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.