Correlation Between Coca Cola and Coca Cola

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

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

Diversification Opportunities for Coca Cola and Coca Cola

0.33

Correlation Coefficient

Coca Cola  Coca Cola

Weak diversification

The 3 months correlation between Coca and Coca is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola European Partners and Coca Cola Femsa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Femsa 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 European Partners 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 Femsa has no effect on the direction of Coca Cola i.e., Coca Cola and Coca Cola go up and down completely randomly.

Pair Corralation between Coca Cola and Coca Cola

Given the investment horizon of 90 days Coca Cola is expected to generate 1.43 times less return on investment than Coca Cola. But when comparing it to its historical volatility, Coca Cola European Partners is 1.67 times less risky than Coca Cola. It trades about 0.2 of its potential returns per unit of risk. Coca Cola Femsa SAB is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  9,289  in Coca Cola Femsa SAB on February 3, 2024 and sell it today you would earn a total of  544.00  from holding Coca Cola Femsa SAB or generate 5.86% 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 European Partners  vs.  Coca Cola Femsa SAB

Coca Cola European

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola European Partners are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Coca Cola is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Coca Cola Femsa

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola Femsa SAB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Coca Cola is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Coca Cola and Coca Cola

The main advantage of trading using opposite Coca Cola and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola 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 Coca Cola European Partners and Coca Cola Femsa SAB 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.