Correlation Between Piraeus Financial and Coca Cola

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

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

Diversification Opportunities for Piraeus Financial and Coca Cola

-0.16

Correlation Coefficient

Piraeus Financial  Coca Cola

Good diversification

The 3 months correlation between Piraeus and Coca is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Piraeus Financial Holdings and Coca Cola HBC AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola HBC and Piraeus Financial 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 Piraeus Financial Holdings 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 HBC has no effect on the direction of Piraeus Financial i.e., Piraeus Financial and Coca Cola go up and down completely randomly.

Pair Corralation between Piraeus Financial and Coca Cola

Assuming the 90 days trading horizon Piraeus Financial Holdings is expected to under-perform the Coca Cola. In addition to that, Piraeus Financial is 1.23 times more volatile than Coca Cola HBC AG. It trades about -0.03 of its total potential returns per unit of risk. Coca Cola HBC AG is currently generating about 0.21 per unit of volatility. If you would invest  2,950  in Coca Cola HBC AG on February 27, 2024 and sell it today you would earn a total of  290.00  from holding Coca Cola HBC AG or generate 9.83% return on investment over 90 days.

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

Piraeus Financial Holdings  vs.  Coca Cola HBC AG

Piraeus Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Piraeus Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Piraeus Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Coca Cola HBC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola HBC AG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Coca Cola unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Piraeus Financial and Coca Cola

The main advantage of trading using opposite Piraeus Financial and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Piraeus Financial 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 Piraeus Financial Holdings and Coca Cola HBC AG 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.