Correlation Between Coca Cola and Tinka Resources
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Tinka Resources 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 Tinka Resources 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 Tinka Resources Limited, you can compare the effects of market volatilities on Coca Cola and Tinka Resources 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 Tinka Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Tinka Resources.
Diversification Opportunities for Coca Cola and Tinka Resources
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coca and Tinka is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Tinka Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tinka Resources 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 Tinka Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tinka Resources has no effect on the direction of Coca Cola i.e., Coca Cola and Tinka Resources go up and down completely randomly.
Pair Corralation between Coca Cola and Tinka Resources
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.14 times more return on investment than Tinka Resources. However, The Coca Cola is 6.97 times less risky than Tinka Resources. It trades about 0.04 of its potential returns per unit of risk. Tinka Resources Limited is currently generating about -0.02 per unit of risk. If you would invest 6,155 in The Coca Cola on September 1, 2024 and sell it today you would earn a total of 253.00 from holding The Coca Cola or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Tinka Resources Limited
Performance |
| Timeline |
| Coca Cola |
| Tinka Resources |
Coca Cola and Tinka Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Tinka Resources
The main advantage of trading using opposite Coca Cola and Tinka Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Tinka Resources 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 Tinka Resources will offset losses from the drop in Tinka Resources' long position.| Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. National Beverage Corp | Coca Cola vs. Embotelladora Andina SA |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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