Correlation Between THAI BEVERAGE and Coca Cola
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE and Coca Cola 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 THAI BEVERAGE and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and Coca Cola Consolidated, you can compare the effects of market volatilities on THAI BEVERAGE and Coca Cola 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 THAI BEVERAGE with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and Coca Cola.
Diversification Opportunities for THAI BEVERAGE and Coca Cola
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between THAI and Coca is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Coca Cola Consolidated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Consolidated and THAI BEVERAGE 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 THAI BEVERAGE are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola Consolidated has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Coca Cola go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and Coca Cola
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 1.11 times more return on investment than Coca Cola. However, THAI BEVERAGE is 1.11 times more volatile than Coca Cola Consolidated. It trades about 0.11 of its potential returns per unit of risk. Coca Cola Consolidated is currently generating about 0.08 per unit of risk. If you would invest 36.00 in THAI BEVERAGE on September 14, 2024 and sell it today you would earn a total of 2.00 from holding THAI BEVERAGE or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THAI BEVERAGE vs. Coca Cola Consolidated
Performance |
| Timeline |
| THAI BEVERAGE |
| Coca Cola Consolidated |
THAI BEVERAGE and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and Coca Cola
The main advantage of trading using opposite THAI BEVERAGE and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.| THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc |
| Coca Cola vs. Solstad Offshore ASA | Coca Cola vs. Evolution Mining Limited | Coca Cola vs. National Beverage Corp | Coca Cola vs. THAI BEVERAGE |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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