Correlation Between Coca Cola and Unipar Carbocloro

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

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

Diversification Opportunities for Coca Cola and Unipar Carbocloro

-0.33

Correlation Coefficient

Coca Cola  Unipar Carbocloro

Very good diversification

The 3 months correlation between Coca and Unipar is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Unipar Carbocloro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unipar Carbocloro and Coca Cola 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 The Coca Cola are associated (or correlated) with Unipar Carbocloro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unipar Carbocloro has no effect on the direction of Coca Cola i.e., Coca Cola and Unipar Carbocloro go up and down completely randomly.

Pair Corralation between Coca Cola and Unipar Carbocloro

Assuming the 90 days trading horizon The Coca Cola is expected to under-perform the Unipar Carbocloro. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 2.84 times less risky than Unipar Carbocloro. The stock trades about -0.01 of its potential returns per unit of risk. The Unipar Carbocloro SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,879  in Unipar Carbocloro SA on September 5, 2024 and sell it today you would earn a total of  521.00  from holding Unipar Carbocloro SA or generate 10.68% return on investment over 90 days.

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

The Coca Cola  vs.  Unipar Carbocloro SA

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 indicators, Coca Cola is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Unipar Carbocloro

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Unipar Carbocloro SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Unipar Carbocloro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coca Cola and Unipar Carbocloro

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

The idea behind The Coca Cola and Unipar Carbocloro SA 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.