Correlation Between Coca Cola and Hang Seng
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Hang Seng 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 Hang Seng 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 Hang Seng Bank, you can compare the effects of market volatilities on Coca Cola and Hang Seng 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 Hang Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Hang Seng.
Diversification Opportunities for Coca Cola and Hang Seng
Very good diversification
The 3 months correlation between Coca and Hang is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Hang Seng Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hang Seng Bank 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 Hang Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hang Seng Bank has no effect on the direction of Coca Cola i.e., Coca Cola and Hang Seng go up and down completely randomly.
Pair Corralation between Coca Cola and Hang Seng
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 1.37 times more return on investment than Hang Seng. However, Coca Cola is 1.37 times more volatile than Hang Seng Bank. It trades about -0.06 of its potential returns per unit of risk. Hang Seng Bank is currently generating about -0.22 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Hang Seng Bank
Performance |
| Timeline |
| Coca Cola |
| Hang Seng Bank |
Coca Cola and Hang Seng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Hang Seng
The main advantage of trading using opposite Coca Cola and Hang Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Hang Seng 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 Hang Seng will offset losses from the drop in Hang Seng'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 |
| Hang Seng vs. Piraeus Bank SA | Hang Seng vs. Turkiye Garanti Bankasi | Hang Seng vs. Delhi Bank Corp | Hang Seng vs. Uwharrie Capital Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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