Correlation Between HSBC Holdings and Coca Cola
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings 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 HSBC Holdings and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC Holdings plc and The Coca Cola, you can compare the effects of market volatilities on HSBC Holdings 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 HSBC Holdings with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Coca Cola.
Diversification Opportunities for HSBC Holdings and Coca Cola
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HSBC and Coca is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and HSBC Holdings 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 HSBC Holdings plc 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 has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Coca Cola go up and down completely randomly.
Pair Corralation between HSBC Holdings and Coca Cola
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 2.11 times more return on investment than Coca Cola. However, HSBC Holdings is 2.11 times more volatile than The Coca Cola. It trades about 0.13 of its potential returns per unit of risk. The Coca Cola is currently generating about -0.08 per unit of risk. If you would invest 76,171 in HSBC Holdings plc on August 28, 2024 and sell it today you would earn a total of 17,329 from holding HSBC Holdings plc or generate 22.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings plc vs. The Coca Cola
Performance |
| Timeline |
| HSBC Holdings plc |
| Coca Cola |
HSBC Holdings and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Coca Cola
The main advantage of trading using opposite HSBC Holdings and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings 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.| HSBC Holdings vs. Ross Stores | HSBC Holdings vs. DXC Technology | HSBC Holdings vs. Verizon Communications | HSBC Holdings vs. First Republic Bank |
| Coca Cola vs. Ameriprise Financial | Coca Cola vs. Monster Beverage Corp | Coca Cola vs. First Majestic Silver | Coca Cola vs. DXC Technology |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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