Correlation Between Arteche Lantegi and Coca Cola

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

By analyzing existing cross correlation between Arteche Lantegi Elkartea and Coca Cola European Partners, you can compare the effects of market volatilities on Arteche Lantegi 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 Arteche Lantegi with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arteche Lantegi and Coca Cola.

Diversification Opportunities for Arteche Lantegi and Coca Cola

-0.48

Correlation Coefficient

Arteche Lantegi  Coca Cola

Very good diversification

The 3 months correlation between Arteche and Coca is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Arteche Lantegi Elkartea and Coca Cola European Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola European and Arteche Lantegi 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 Arteche Lantegi Elkartea 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 European has no effect on the direction of Arteche Lantegi i.e., Arteche Lantegi and Coca Cola go up and down completely randomly.

Pair Corralation between Arteche Lantegi and Coca Cola

Assuming the 90 days trading horizon Arteche Lantegi is expected to generate 1.75 times less return on investment than Coca Cola. In addition to that, Arteche Lantegi is 2.01 times more volatile than Coca Cola European Partners. It trades about 0.04 of its total potential returns per unit of risk. Coca Cola European Partners is currently generating about 0.13 per unit of volatility. If you would invest  7,230  in Coca Cola European Partners on December 29, 2024 and sell it today you would earn a total of  780.00  from holding Coca Cola European Partners or generate 10.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Arteche Lantegi Elkartea  vs.  Coca Cola European Partners

Arteche Lantegi Elkartea

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arteche Lantegi Elkartea are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Arteche Lantegi is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Coca Cola European

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola European Partners are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Coca Cola may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Arteche Lantegi and Coca Cola

The main advantage of trading using opposite Arteche Lantegi and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arteche Lantegi 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 Arteche Lantegi Elkartea and Coca Cola European Partners 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.