Correlation Between Coca Cola and Yakult Honsha
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Yakult Honsha 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 Yakult Honsha 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 Yakult Honsha CoLtd, you can compare the effects of market volatilities on Coca Cola and Yakult Honsha 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 Yakult Honsha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Yakult Honsha.
Diversification Opportunities for Coca Cola and Yakult Honsha
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Coca and Yakult is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Consolidated and Yakult Honsha CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yakult Honsha CoLtd 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 Yakult Honsha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yakult Honsha CoLtd has no effect on the direction of Coca Cola i.e., Coca Cola and Yakult Honsha go up and down completely randomly.
Pair Corralation between Coca Cola and Yakult Honsha
Assuming the 90 days horizon Coca Cola Consolidated is expected to generate 1.14 times more return on investment than Yakult Honsha. However, Coca Cola is 1.14 times more volatile than Yakult Honsha CoLtd. It trades about 0.11 of its potential returns per unit of risk. Yakult Honsha CoLtd is currently generating about 0.09 per unit of risk. If you would invest 93,254 in Coca Cola Consolidated on September 14, 2024 and sell it today you would earn a total of 26,746 from holding Coca Cola Consolidated or generate 28.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola Consolidated vs. Yakult Honsha CoLtd
Performance |
| Timeline |
| Coca Cola Consolidated |
| Yakult Honsha CoLtd |
Coca Cola and Yakult Honsha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Yakult Honsha
The main advantage of trading using opposite Coca Cola and Yakult Honsha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Yakult Honsha 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 Yakult Honsha will offset losses from the drop in Yakult Honsha's 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 |
| Yakult Honsha vs. Coca Cola FEMSA SAB | Yakult Honsha vs. Coca Cola HBC | Yakult Honsha vs. Coca Cola Consolidated | Yakult Honsha vs. Britvic plc |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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