Correlation Between Coca Cola and Alpha Trust

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

By analyzing existing cross correlation between Coca Cola HBC AG and Alpha Trust Mutual, you can compare the effects of market volatilities on Coca Cola and Alpha Trust 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 Alpha Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Alpha Trust.

Diversification Opportunities for Coca Cola and Alpha Trust

0.43

Correlation Coefficient

Coca Cola  Alpha Trust

Very weak diversification

The 3 months correlation between Coca and Alpha is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola HBC AG and Alpha Trust Mutual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Trust Mutual 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 HBC AG are associated (or correlated) with Alpha Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Trust Mutual has no effect on the direction of Coca Cola i.e., Coca Cola and Alpha Trust go up and down completely randomly.

Pair Corralation between Coca Cola and Alpha Trust

Assuming the 90 days trading horizon Coca Cola is expected to generate 1.1 times less return on investment than Alpha Trust. In addition to that, Coca Cola is 2.82 times more volatile than Alpha Trust Mutual. It trades about 0.0 of its total potential returns per unit of risk. Alpha Trust Mutual is currently generating about 0.01 per unit of volatility. If you would invest  870.00  in Alpha Trust Mutual on September 14, 2024 and sell it today you would earn a total of  2.00  from holding Alpha Trust Mutual or generate 0.23% return on investment over 90 days.

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

Coca Cola HBC AG  vs.  Alpha Trust Mutual

Coca Cola HBC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coca Cola HBC AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Coca Cola is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Alpha Trust Mutual

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Coca Cola and Alpha Trust

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

The idea behind Coca Cola HBC AG and Alpha Trust Mutual 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.