Correlation Between Coca Cola and AEON STORES
Can any of the company-specific risk be diversified away by investing in both Coca Cola and AEON STORES 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 AEON STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola HBC and AEON STORES, you can compare the effects of market volatilities on Coca Cola and AEON STORES 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 AEON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and AEON STORES.
Diversification Opportunities for Coca Cola and AEON STORES
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Coca and AEON is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola HBC and AEON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON STORES 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 are associated (or correlated) with AEON STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON STORES has no effect on the direction of Coca Cola i.e., Coca Cola and AEON STORES go up and down completely randomly.
Pair Corralation between Coca Cola and AEON STORES
Assuming the 90 days horizon Coca Cola HBC is expected to generate 4.61 times more return on investment than AEON STORES. However, Coca Cola is 4.61 times more volatile than AEON STORES. It trades about 0.03 of its potential returns per unit of risk. AEON STORES is currently generating about -0.22 per unit of risk. If you would invest 3,332 in Coca Cola HBC on September 3, 2024 and sell it today you would earn a total of 74.00 from holding Coca Cola HBC or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola HBC vs. AEON STORES
Performance |
| Timeline |
| Coca Cola HBC |
| AEON STORES |
Coca Cola and AEON STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and AEON STORES
The main advantage of trading using opposite Coca Cola and AEON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, AEON STORES 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 AEON STORES will offset losses from the drop in AEON STORES's long position.| Coca Cola vs. AEON STORES | Coca Cola vs. Darden Restaurants | Coca Cola vs. COSTCO WHOLESALE CDR | Coca Cola vs. BURLINGTON STORES |
| AEON STORES vs. TOTAL GABON | AEON STORES vs. Walgreens Boots Alliance | AEON STORES vs. Banco Santander SA | AEON STORES vs. Peak Resources Limited |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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