Correlation Between Coca Cola and RF Industries
Can any of the company-specific risk be diversified away by investing in both Coca Cola and RF Industries 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 RF Industries 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 RF Industries, you can compare the effects of market volatilities on Coca Cola and RF Industries 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 RF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and RF Industries.
Diversification Opportunities for Coca Cola and RF Industries
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca and RFIL is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and RF Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Industries 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 RF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Industries has no effect on the direction of Coca Cola i.e., Coca Cola and RF Industries go up and down completely randomly.
Pair Corralation between Coca Cola and RF Industries
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the RF Industries. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.9 times less risky than RF Industries. The stock trades about -0.26 of its potential returns per unit of risk. The RF Industries is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 425.00 in RF Industries on August 25, 2024 and sell it today you would lose (18.00) from holding RF Industries or give up 4.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. RF Industries
Performance |
| Timeline |
| Coca Cola |
| RF Industries |
Coca Cola and RF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and RF Industries
The main advantage of trading using opposite Coca Cola and RF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, RF Industries 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 RF Industries will offset losses from the drop in RF Industries' long position.| Coca Cola vs. Keurig Dr Pepper | Coca Cola vs. Eshallgo Class A | Coca Cola vs. Amtech Systems | Coca Cola vs. Gold Fields Ltd |
| RF Industries vs. Nortech Systems Incorporated | RF Industries vs. Richardson Electronics | RF Industries vs. AstroNova | RF Industries vs. Aquagold International |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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