Correlation Between COCA COLA and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both COCA COLA and Origin Agritech 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 Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COCA A HBC and Origin Agritech, you can compare the effects of market volatilities on COCA COLA and Origin Agritech 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 Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of COCA COLA and Origin Agritech.
Diversification Opportunities for COCA COLA and Origin Agritech
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between COCA and Origin is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding COCA A HBC and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech 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 A HBC are associated (or correlated) with Origin Agritech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Agritech has no effect on the direction of COCA COLA i.e., COCA COLA and Origin Agritech go up and down completely randomly.
Pair Corralation between COCA COLA and Origin Agritech
Assuming the 90 days trading horizon COCA A HBC is expected to generate 0.43 times more return on investment than Origin Agritech. However, COCA A HBC is 2.31 times less risky than Origin Agritech. It trades about -0.02 of its potential returns per unit of risk. Origin Agritech is currently generating about -0.19 per unit of risk. If you would invest 3,320 in COCA A HBC on August 24, 2024 and sell it today you would lose (40.00) from holding COCA A HBC or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COCA A HBC vs. Origin Agritech
Performance |
| Timeline |
| COCA A HBC |
| Origin Agritech |
COCA COLA and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COCA COLA and Origin Agritech
The main advantage of trading using opposite COCA COLA and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COCA COLA position performs unexpectedly, Origin Agritech 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 Origin Agritech will offset losses from the drop in Origin Agritech's long position.| COCA COLA vs. FRACTAL GAMING GROUP | COCA COLA vs. Fast Retailing Co | COCA COLA vs. QIIWI GAMES AB | COCA COLA vs. PICKN PAY STORES |
| Origin Agritech vs. Origin Energy Limited | Origin Agritech vs. Origin Energy Limited | Origin Agritech vs. Origin Energy Limited | Origin Agritech vs. Origin Enterprises 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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