Correlation Between YAOKO CO and Coca Cola
Can any of the company-specific risk be diversified away by investing in both YAOKO CO 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 YAOKO CO and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YAOKO LTD and The Coca Cola, you can compare the effects of market volatilities on YAOKO CO 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 YAOKO CO with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of YAOKO CO and Coca Cola.
Diversification Opportunities for YAOKO CO and Coca Cola
Poor diversification
The 3 months correlation between YAOKO and Coca is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding YAOKO LTD and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and YAOKO CO 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 YAOKO LTD 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 has no effect on the direction of YAOKO CO i.e., YAOKO CO and Coca Cola go up and down completely randomly.
Pair Corralation between YAOKO CO and Coca Cola
Assuming the 90 days horizon YAOKO LTD is expected to generate 1.67 times more return on investment than Coca Cola. However, YAOKO CO is 1.67 times more volatile than The Coca Cola. It trades about 0.05 of its potential returns per unit of risk. The Coca Cola is currently generating about 0.04 per unit of risk. If you would invest 4,480 in YAOKO LTD on August 28, 2024 and sell it today you would earn a total of 1,120 from holding YAOKO LTD or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
YAOKO LTD vs. The Coca Cola
Performance |
| Timeline |
| YAOKO LTD |
| Coca Cola |
YAOKO CO and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YAOKO CO and Coca Cola
The main advantage of trading using opposite YAOKO CO and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YAOKO CO 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.| YAOKO CO vs. Superior Plus Corp | YAOKO CO vs. NMI Holdings | YAOKO CO vs. Origin Agritech | YAOKO CO vs. SIVERS SEMICONDUCTORS AB |
| Coca Cola vs. National Bank Holdings | Coca Cola vs. CDN IMPERIAL BANK | Coca Cola vs. Ameriprise Financial | Coca Cola vs. Aedas Homes SA |
Check out your portfolio center.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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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