Correlation Between IhumanInc and Coca Cola

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

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

Diversification Opportunities for IhumanInc and Coca Cola

-0.01

Correlation Coefficient

IhumanInc  Coca Cola

Good diversification

The 3 months correlation between IhumanInc and Coca is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding IhumanInc and Coca Cola Femsa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Femsa and IhumanInc 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 IhumanInc 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 Femsa has no effect on the direction of IhumanInc i.e., IhumanInc and Coca Cola go up and down completely randomly.

Pair Corralation between IhumanInc and Coca Cola

Allowing for the 90-day total investment horizon IhumanInc is expected to under-perform the Coca Cola. In addition to that, IhumanInc is 1.38 times more volatile than Coca Cola Femsa SAB. It trades about -0.05 of its total potential returns per unit of risk. Coca Cola Femsa SAB is currently generating about 0.17 per unit of volatility. If you would invest  9,524  in Coca Cola Femsa SAB on January 31, 2024 and sell it today you would earn a total of  546.00  from holding Coca Cola Femsa SAB or generate 5.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

IhumanInc  vs.  Coca Cola Femsa SAB

IhumanInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IhumanInc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Coca Cola Femsa

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola Femsa SAB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Coca Cola may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with IhumanInc and Coca Cola

The main advantage of trading using opposite IhumanInc and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IhumanInc 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 IhumanInc and Coca Cola Femsa SAB 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..