Correlation Between Dogu Aras and Coca Cola

Can any of the company-specific risk be diversified away by investing in both Dogu Aras 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 Dogu Aras and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dogu Aras Enerji and Coca Cola Icecek AS, you can compare the effects of market volatilities on Dogu Aras 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 Dogu Aras with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dogu Aras and Coca Cola.

Diversification Opportunities for Dogu Aras and Coca Cola

-0.33

Correlation Coefficient

Dogu Aras  Coca Cola

Very good diversification

The 3 months correlation between Dogu and Coca is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dogu Aras Enerji and Coca Cola Icecek AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Icecek and Dogu Aras 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 Dogu Aras Enerji 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 Icecek has no effect on the direction of Dogu Aras i.e., Dogu Aras and Coca Cola go up and down completely randomly.

Pair Corralation between Dogu Aras and Coca Cola

Assuming the 90 days trading horizon Dogu Aras is expected to generate 4.06 times less return on investment than Coca Cola. But when comparing it to its historical volatility, Dogu Aras Enerji is 3.15 times less risky than Coca Cola. It trades about 0.04 of its potential returns per unit of risk. Coca Cola Icecek AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,814  in Coca Cola Icecek AS on October 10, 2024 and sell it today you would earn a total of  3,826  from holding Coca Cola Icecek AS or generate 210.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.99%
Values	Daily Returns

Dogu Aras Enerji  vs.  Coca Cola Icecek AS

Dogu Aras Enerji

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dogu Aras Enerji has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Dogu Aras is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Coca Cola Icecek

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola Icecek AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Coca Cola may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Dogu Aras and Coca Cola

The main advantage of trading using opposite Dogu Aras and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dogu Aras 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.

The idea behind Dogu Aras Enerji and Coca Cola Icecek AS 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.