Correlation Between Coca Cola and PT Astra
Can any of the company-specific risk be diversified away by investing in both Coca Cola and PT Astra 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 PT Astra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola European Partners and PT Astra International, you can compare the effects of market volatilities on Coca Cola and PT Astra 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 PT Astra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and PT Astra.
Diversification Opportunities for Coca Cola and PT Astra
Weak diversification
The 3 months correlation between Coca and ASII is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola European Partners and PT Astra International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Astra International 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 European Partners are associated (or correlated) with PT Astra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Astra International has no effect on the direction of Coca Cola i.e., Coca Cola and PT Astra go up and down completely randomly.
Pair Corralation between Coca Cola and PT Astra
Given the investment horizon of 90 days Coca Cola is expected to generate 19.9 times less return on investment than PT Astra. But when comparing it to its historical volatility, Coca Cola European Partners is 20.24 times less risky than PT Astra. It trades about 0.09 of its potential returns per unit of risk. PT Astra International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.14 in PT Astra International on August 24, 2024 and sell it today you would lose (0.09) from holding PT Astra International or give up 64.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola European Partners vs. PT Astra International
Performance |
| Timeline |
| Coca Cola European |
| PT Astra International |
Coca Cola and PT Astra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and PT Astra
The main advantage of trading using opposite Coca Cola and PT Astra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, PT Astra 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 PT Astra will offset losses from the drop in PT Astra's long position.| Coca Cola vs. Vita Coco | Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. Embotelladora Andina SA | Coca Cola vs. National Beverage Corp |
| PT Astra vs. Embotelladora Andina SA | PT Astra vs. Embotelladora Andina SA | PT Astra vs. Apple Rush | PT Astra vs. Alkame Holdings |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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