Correlation Between Coca Cola and Asia Broadband
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Asia Broadband 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 Asia Broadband into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Coca Cola and Asia Broadband, you can compare the effects of market volatilities on Coca Cola and Asia Broadband 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 Asia Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Asia Broadband.
Diversification Opportunities for Coca Cola and Asia Broadband
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coca and Asia is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Asia Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Broadband 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 The Coca Cola are associated (or correlated) with Asia Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Broadband has no effect on the direction of Coca Cola i.e., Coca Cola and Asia Broadband go up and down completely randomly.
Pair Corralation between Coca Cola and Asia Broadband
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.15 times more return on investment than Asia Broadband. However, The Coca Cola is 6.75 times less risky than Asia Broadband. It trades about -0.06 of its potential returns per unit of risk. Asia Broadband is currently generating about -0.06 per unit of risk. If you would invest 6,482 in The Coca Cola on September 1, 2024 and sell it today you would lose (74.00) from holding The Coca Cola or give up 1.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Coca Cola vs. Asia Broadband
Performance |
| Timeline |
| Coca Cola |
| Asia Broadband |
Coca Cola and Asia Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Asia Broadband
The main advantage of trading using opposite Coca Cola and Asia Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Asia Broadband 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 Asia Broadband will offset losses from the drop in Asia Broadband's long position.| Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. Embotelladora Andina SA | Coca Cola vs. National Beverage Corp | Coca Cola vs. Embotelladora Andina SA |
| Asia Broadband vs. Fury Gold Mines | Asia Broadband vs. Lion Copper and | Asia Broadband vs. Trilogy Metals | Asia Broadband vs. Western Copper and |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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