Correlation Between Coca Cola and CosmoSteel Holdings
Can any of the company-specific risk be diversified away by investing in both Coca Cola and CosmoSteel Holdings 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 CosmoSteel Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola Consolidated and CosmoSteel Holdings Limited, you can compare the effects of market volatilities on Coca Cola and CosmoSteel Holdings 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 CosmoSteel Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and CosmoSteel Holdings.
Diversification Opportunities for Coca Cola and CosmoSteel Holdings
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Coca and CosmoSteel is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Consolidated and CosmoSteel Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CosmoSteel Holdings 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 Consolidated are associated (or correlated) with CosmoSteel Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CosmoSteel Holdings has no effect on the direction of Coca Cola i.e., Coca Cola and CosmoSteel Holdings go up and down completely randomly.
Pair Corralation between Coca Cola and CosmoSteel Holdings
Assuming the 90 days horizon Coca Cola is expected to generate 3.75 times less return on investment than CosmoSteel Holdings. But when comparing it to its historical volatility, Coca Cola Consolidated is 1.75 times less risky than CosmoSteel Holdings. It trades about 0.11 of its potential returns per unit of risk. CosmoSteel Holdings Limited is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 6.05 in CosmoSteel Holdings Limited on September 13, 2024 and sell it today you would earn a total of 1.25 from holding CosmoSteel Holdings Limited or generate 20.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Coca Cola Consolidated vs. CosmoSteel Holdings Limited
Performance |
| Timeline |
| Coca Cola Consolidated |
| CosmoSteel Holdings |
Coca Cola and CosmoSteel Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and CosmoSteel Holdings
The main advantage of trading using opposite Coca Cola and CosmoSteel Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, CosmoSteel Holdings 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 CosmoSteel Holdings will offset losses from the drop in CosmoSteel Holdings' long position.| Coca Cola vs. Solstad Offshore ASA | Coca Cola vs. Evolution Mining Limited | Coca Cola vs. National Beverage Corp | Coca Cola vs. THAI BEVERAGE |
| CosmoSteel Holdings vs. WATSCO INC B | CosmoSteel Holdings vs. Indutrade AB | CosmoSteel Holdings vs. Superior Plus Corp | CosmoSteel Holdings vs. SIVERS SEMICONDUCTORS AB |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |