Correlation Between Coca Cola and United Overseas
Can any of the company-specific risk be diversified away by investing in both Coca Cola and United Overseas 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 United Overseas 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 United Overseas Bank, you can compare the effects of market volatilities on Coca Cola and United Overseas 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 United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and United Overseas.
Diversification Opportunities for Coca Cola and United Overseas
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and United is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and United Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Overseas 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 United Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Overseas Bank has no effect on the direction of Coca Cola i.e., Coca Cola and United Overseas go up and down completely randomly.
Pair Corralation between Coca Cola and United Overseas
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the United Overseas. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 2.01 times less risky than United Overseas. The stock trades about -0.17 of its potential returns per unit of risk. The United Overseas Bank is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 4,916 in United Overseas Bank on August 28, 2024 and sell it today you would earn a total of 485.00 from holding United Overseas Bank or generate 9.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Coca Cola vs. United Overseas Bank
Performance |
| Timeline |
| Coca Cola |
| United Overseas Bank |
Coca Cola and United Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and United Overseas
The main advantage of trading using opposite Coca Cola and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, United Overseas 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 United Overseas will offset losses from the drop in United Overseas' 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 |
| United Overseas vs. KBC Groep NV | United Overseas vs. DBS Group Holdings | United Overseas vs. HomeStreet | United Overseas vs. Bank of Hawaii |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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