Correlation Between Coca Cola and AKITA Drilling
Can any of the company-specific risk be diversified away by investing in both Coca Cola and AKITA Drilling 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 AKITA Drilling 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 AKITA Drilling, you can compare the effects of market volatilities on Coca Cola and AKITA Drilling 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 AKITA Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and AKITA Drilling.
Diversification Opportunities for Coca Cola and AKITA Drilling
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and AKITA is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling 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 AKITA Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKITA Drilling has no effect on the direction of Coca Cola i.e., Coca Cola and AKITA Drilling go up and down completely randomly.
Pair Corralation between Coca Cola and AKITA Drilling
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 10.1 times less return on investment than AKITA Drilling. But when comparing it to its historical volatility, The Coca Cola is 2.88 times less risky than AKITA Drilling. It trades about 0.02 of its potential returns per unit of risk. AKITA Drilling is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 97.00 in AKITA Drilling on September 5, 2024 and sell it today you would earn a total of 18.00 from holding AKITA Drilling or generate 18.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. AKITA Drilling
Performance |
| Timeline |
| Coca Cola |
| AKITA Drilling |
Coca Cola and AKITA Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and AKITA Drilling
The main advantage of trading using opposite Coca Cola and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, AKITA Drilling 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 AKITA Drilling will offset losses from the drop in AKITA Drilling's long position.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
| AKITA Drilling vs. Cathedral Energy Services | AKITA Drilling vs. Vantage Drilling International | AKITA Drilling vs. Seadrill Limited | AKITA Drilling vs. Noble 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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