Correlation Between Standard Chartered and Coca Cola

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

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

Diversification Opportunities for Standard Chartered and Coca Cola

0.72

Correlation Coefficient

Standard Chartered  Coca Cola

Poor diversification

The 3 months correlation between Standard and Coca is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Standard Chartered PLC and Coca Cola HBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola HBC and Standard Chartered 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 Standard Chartered PLC 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 Standard Chartered i.e., Standard Chartered and Coca Cola go up and down completely randomly.

Pair Corralation between Standard Chartered and Coca Cola

Assuming the 90 days trading horizon Standard Chartered PLC is expected to generate 1.65 times more return on investment than Coca Cola. However, Standard Chartered is 1.65 times more volatile than Coca Cola HBC. It trades about 0.18 of its potential returns per unit of risk. Coca Cola HBC is currently generating about 0.12 per unit of risk. If you would invest  108,300  in Standard Chartered PLC on April 24, 2025 and sell it today you would earn a total of  24,750  from holding Standard Chartered PLC or generate 22.85% return on investment over 90 days.

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

Standard Chartered PLC  vs.  Coca Cola HBC

Standard Chartered PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Chartered PLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Standard Chartered unveiled solid returns over the last few months and may actually be approaching a breakup point.

Coca Cola HBC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola HBC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Coca Cola may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Standard Chartered and Coca Cola

The main advantage of trading using opposite Standard Chartered and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Chartered 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 Standard Chartered PLC and Coca Cola 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.