Correlation Between KRISPY KREME and COCA A

Can any of the company-specific risk be diversified away by investing in both KRISPY KREME and COCA A 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 KRISPY KREME and COCA A into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KRISPY KREME DL 01 and COCA A HBC, you can compare the effects of market volatilities on KRISPY KREME and COCA A 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 KRISPY KREME with a short position of COCA A. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and COCA A.

Diversification Opportunities for KRISPY KREME and COCA A

0.35

Correlation Coefficient

KRISPY KREME  COCA A

Weak diversification

The 3 months correlation between KRISPY and COCA is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and COCA A HBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A HBC and KRISPY KREME 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 KRISPY KREME DL 01 are associated (or correlated) with COCA A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A HBC has no effect on the direction of KRISPY KREME i.e., KRISPY KREME and COCA A go up and down completely randomly.

Pair Corralation between KRISPY KREME and COCA A

Assuming the 90 days horizon KRISPY KREME DL 01 is expected to under-perform the COCA A. In addition to that, KRISPY KREME is 1.43 times more volatile than COCA A HBC. It trades about -0.02 of its total potential returns per unit of risk. COCA A HBC is currently generating about 0.0 per unit of volatility. If you would invest  3,320  in COCA A HBC on September 12, 2024 and sell it today you would lose (20.00) from holding COCA A HBC or give up 0.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

KRISPY KREME DL 01  vs.  COCA A HBC

KRISPY KREME DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, KRISPY KREME is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

COCA A HBC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COCA A HBC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, COCA A is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KRISPY KREME and COCA A

The main advantage of trading using opposite KRISPY KREME and COCA A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRISPY KREME position performs unexpectedly, COCA A 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 A will offset losses from the drop in COCA A's long position.

The idea behind KRISPY KREME DL 01 and COCA A HBC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.