Correlation Between Coca Cola and COCA A

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

Diversification Opportunities for Coca Cola and COCA A

-0.3

Correlation Coefficient

Coca Cola  COCA A

Very good diversification

The 3 months correlation between Coca and COCA is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and COCA A HBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A HBC 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 COCA A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A HBC has no effect on the direction of Coca Cola i.e., Coca Cola and COCA A go up and down completely randomly.

Pair Corralation between Coca Cola and COCA A

Assuming the 90 days trading horizon The Coca Cola is expected to under-perform the COCA A. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.77 times less risky than COCA A. The stock trades about -0.11 of its potential returns per unit of risk. The COCA A HBC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,200  in COCA A HBC on September 27, 2024 and sell it today you would earn a total of  20.00  from holding COCA A HBC or generate 0.63% return on investment over 90 days.

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

The Coca Cola  vs.  COCA A HBC

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. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

COCA A HBC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COCA A HBC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, COCA A is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Coca Cola and COCA A

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

The idea behind The Coca Cola and COCA A HBC 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.