Correlation Between UET United and Coca Cola
Can any of the company-specific risk be diversified away by investing in both UET United and Coca Cola 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 UET United and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UET United Electronic and Coca Cola Consolidated, you can compare the effects of market volatilities on UET United and Coca Cola 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 UET United with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of UET United and Coca Cola.
Diversification Opportunities for UET United and Coca Cola
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UET and Coca is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding UET United Electronic and Coca Cola Consolidated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Consolidated and UET United 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 UET United Electronic are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola Consolidated has no effect on the direction of UET United i.e., UET United and Coca Cola go up and down completely randomly.
Pair Corralation between UET United and Coca Cola
Assuming the 90 days trading horizon UET United is expected to generate 1.04 times less return on investment than Coca Cola. In addition to that, UET United is 3.03 times more volatile than Coca Cola Consolidated. It trades about 0.09 of its total potential returns per unit of risk. Coca Cola Consolidated is currently generating about 0.29 per unit of volatility. If you would invest 116,000 in Coca Cola Consolidated on October 25, 2024 and sell it today you would earn a total of 14,000 from holding Coca Cola Consolidated or generate 12.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UET United Electronic vs. Coca Cola Consolidated
Performance |
| Timeline |
| UET United Electronic |
| Coca Cola Consolidated |
UET United and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UET United and Coca Cola
The main advantage of trading using opposite UET United and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UET United position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.| UET United vs. MOLSON RS BEVERAGE | UET United vs. CARSALESCOM | UET United vs. INTER CARS SA | UET United vs. Commercial Vehicle Group |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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