Correlation Between Coca Cola and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Coca Cola and Samsung Electronics 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 Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola FEMSA SAB and Samsung Electronics Co, you can compare the effects of market volatilities on Coca Cola and Samsung Electronics 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 Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Samsung Electronics.
Diversification Opportunities for Coca Cola and Samsung Electronics
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Coca and Samsung is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola FEMSA SAB and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics 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 Coca Cola FEMSA SAB are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Coca Cola i.e., Coca Cola and Samsung Electronics go up and down completely randomly.
Pair Corralation between Coca Cola and Samsung Electronics
Assuming the 90 days trading horizon Coca Cola FEMSA SAB is expected to generate 0.65 times more return on investment than Samsung Electronics. However, Coca Cola FEMSA SAB is 1.53 times less risky than Samsung Electronics. It trades about 0.02 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.06 per unit of risk. If you would invest 16,021 in Coca Cola FEMSA SAB on September 3, 2024 and sell it today you would earn a total of 450.00 from holding Coca Cola FEMSA SAB or generate 2.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola FEMSA SAB vs. Samsung Electronics Co
Performance |
| Timeline |
| Coca Cola FEMSA |
| Samsung Electronics |
Coca Cola and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Samsung Electronics
The main advantage of trading using opposite Coca Cola and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.| Coca Cola vs. Arca Continental SAB | Coca Cola vs. Wal Mart de Mxico | Coca Cola vs. Fomento Econmico Mexicano | Coca Cola vs. Orbia Advance |
| Samsung Electronics vs. Apple Inc | Samsung Electronics vs. The Select Sector | Samsung Electronics vs. Promotora y Operadora | Samsung Electronics vs. SPDR Series Trust |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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