Correlation Between AllovirInc and Coca-Cola European

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

Diversification Opportunities for AllovirInc and Coca-Cola European

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between AllovirInc and Coca-Cola is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding AllovirInc and Coca-Cola European Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca-Cola European and AllovirInc 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 AllovirInc are associated (or correlated) with Coca-Cola European. 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 European has no effect on the direction of AllovirInc i.e., AllovirInc and Coca-Cola European go up and down completely randomly.

Pair Corralation between AllovirInc and Coca-Cola European

Given the investment horizon of 90 days AllovirInc is expected to generate 1.07 times less return on investment than Coca-Cola European. In addition to that, AllovirInc is 3.97 times more volatile than Coca-Cola European Partners. It trades about 0.13 of its total potential returns per unit of risk. Coca-Cola European Partners is currently generating about 0.54 per unit of volatility. If you would invest  4,652  in Coca-Cola European Partners on September 4, 2022 and sell it today you would earn a total of  740.00  from holding Coca-Cola European Partners or generate 15.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

AllovirInc  vs.  Coca-Cola European Partners

 Performance (%) 
       Timeline  
AllovirInc 
AllovirInc Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in AllovirInc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, AllovirInc reported solid returns over the last few months and may actually be approaching a breakup point.

AllovirInc Price Channel

Coca-Cola European 
Coca-Cola Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Coca-Cola European Partners are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, Coca-Cola European displayed solid returns over the last few months and may actually be approaching a breakup point.

Coca-Cola Price Channel

AllovirInc and Coca-Cola European Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AllovirInc and Coca-Cola European

The main advantage of trading using opposite AllovirInc and Coca-Cola European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AllovirInc position performs unexpectedly, Coca-Cola European 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 European will offset losses from the drop in Coca-Cola European's long position.
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The idea behind AllovirInc and Coca-Cola European Partners 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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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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