Correlation Between Coca Cola and Koc Holding

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

By analyzing existing cross correlation between Coca Cola Icecek AS and Koc Holding AS, you can compare the effects of market volatilities on Coca Cola and Koc Holding 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 Koc Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Koc Holding.

Diversification Opportunities for Coca Cola and Koc Holding

0.33

Correlation Coefficient

Coca Cola  Koc Holding

Weak diversification

The 3 months correlation between Coca and Koc is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Icecek AS and Koc Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koc Holding AS 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 Coca Cola Icecek AS are associated (or correlated) with Koc Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koc Holding AS has no effect on the direction of Coca Cola i.e., Coca Cola and Koc Holding go up and down completely randomly.

Pair Corralation between Coca Cola and Koc Holding

Assuming the 90 days trading horizon Coca Cola Icecek AS is expected to under-perform the Koc Holding. In addition to that, Coca Cola is 1.17 times more volatile than Koc Holding AS. It trades about -0.11 of its total potential returns per unit of risk. Koc Holding AS is currently generating about 0.04 per unit of volatility. If you would invest  19,270  in Koc Holding AS on September 2, 2024 and sell it today you would earn a total of  780.00  from holding Koc Holding AS or generate 4.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Coca Cola Icecek AS  vs.  Koc Holding AS

Coca Cola Icecek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coca Cola Icecek AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Koc Holding AS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Koc Holding AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Koc Holding is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Coca Cola and Koc Holding

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

The idea behind Coca Cola Icecek AS and Koc Holding AS 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.