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 Coca Cola FEMSA SAB, 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
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HSBC and Coca is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Coca Cola FEMSA SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola FEMSA 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 FEMSA 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 0.96 times more return on investment than Coca Cola. However, HSBC Holdings plc is 1.05 times less risky than Coca Cola. It trades about 0.07 of its potential returns per unit of risk. Coca Cola FEMSA SAB is currently generating about 0.05 per unit of risk. If you would invest 60,437 in HSBC Holdings plc on November 1, 2024 and sell it today you would earn a total of 33,063 from holding HSBC Holdings plc or generate 54.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 99.8% |
Values | Daily Returns |
HSBC Holdings plc vs. Coca Cola FEMSA SAB
Performance |
Timeline |
HSBC Holdings plc |
Coca Cola FEMSA |
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. Capital One Financial | HSBC Holdings vs. Southern Copper | HSBC Holdings vs. Prudential Financial | HSBC Holdings vs. Lloyds Banking 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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