Correlation Between Coca Cola and BRFSBZ

Can any of the company-specific risk be diversified away by investing in both Coca Cola and BRFSBZ 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 BRFSBZ 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 BRFSBZ 575 21 SEP 50, you can compare the effects of market volatilities on Coca Cola and BRFSBZ 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 BRFSBZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and BRFSBZ.

Diversification Opportunities for Coca Cola and BRFSBZ

-0.76

Correlation Coefficient

Coca Cola  BRFSBZ

Pay attention - limited upside

The 3 months correlation between Coca and BRFSBZ is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and BRFSBZ 575 21 SEP 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRFSBZ 575 21 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 BRFSBZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRFSBZ 575 21 has no effect on the direction of Coca Cola i.e., Coca Cola and BRFSBZ go up and down completely randomly.

Pair Corralation between Coca Cola and BRFSBZ

Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.4 times more return on investment than BRFSBZ. However, The Coca Cola is 2.49 times less risky than BRFSBZ. It trades about -0.23 of its potential returns per unit of risk. BRFSBZ 575 21 SEP 50 is currently generating about -0.33 per unit of risk. If you would invest  7,087  in The Coca Cola on September 13, 2024 and sell it today you would lose (823.00) from holding The Coca Cola or give up 11.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	17.46%
Values	Daily Returns

The Coca Cola  vs.  BRFSBZ 575 21 SEP 50

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. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

BRFSBZ 575 21

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRFSBZ 575 21 SEP 50 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for BRFSBZ 575 21 SEP 50 investors.

Pair Trading with Coca Cola and BRFSBZ

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

The idea behind The Coca Cola and BRFSBZ 575 21 SEP 50 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.