Correlation Between Stealthgas and Coca Cola

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Can any of the company-specific risk be diversified away by investing in both Stealthgas 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 Stealthgas and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stealthgas and Coca Cola Europacific, you can compare the effects of market volatilities on Stealthgas 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 Stealthgas with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stealthgas and Coca Cola.

Diversification Opportunities for Stealthgas and Coca Cola

0.55
  Correlation Coefficient

Very weak diversification

The 1 month correlation between Stealthgas and Coca Cola is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Stealthgas and Coca Cola Europacific Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Europacific and Stealthgas 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 Stealthgas 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 Europacific has no effect on the direction of Stealthgas i.e., Stealthgas and Coca Cola go up and down completely randomly.

Pair Corralation between Stealthgas and Coca Cola

Given the investment horizon of 90 days Stealthgas is expected to under-perform the Coca Cola. In addition to that, Stealthgas is 3.47 times more volatile than Coca Cola Europacific. It trades about -0.1 of its total potential returns per unit of risk. Coca Cola Europacific is currently generating about 0.08 per unit of volatility. If you would invest  5,078  in Coca Cola Europacific on May 14, 2022 and sell it today you would earn a total of  260.00  from holding Coca Cola Europacific or generate 5.12% return on investment over 90 days.
Time Period1 Month [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Stealthgas  vs.  Coca Cola Europacific Partners

 Performance (%) 
       Timeline  
Stealthgas 
Stealthgas Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Stealthgas are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Stealthgas reported solid returns over the last few months and may actually be approaching a breakup point.

Stealthgas Price Channel

Coca Cola Europacific 
Coca Cola Performance
15 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola Europacific are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Coca Cola displayed solid returns over the last few months and may actually be approaching a breakup point.

Coca Cola Price Channel

Stealthgas and Coca Cola Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Stealthgas and Coca Cola

The main advantage of trading using opposite Stealthgas and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stealthgas 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 Stealthgas and Coca Cola Europacific 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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