Correlation Between PT Bank and Coca Cola

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

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

Diversification Opportunities for PT Bank and Coca Cola

-0.73

Correlation Coefficient

PT Bank  Coca Cola

Pay attention - limited upside

The 3 months correlation between BYRA and Coca is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Coca Cola HBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola HBC and PT Bank 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 PT Bank Rakyat 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 HBC has no effect on the direction of PT Bank i.e., PT Bank and Coca Cola go up and down completely randomly.

Pair Corralation between PT Bank and Coca Cola

Assuming the 90 days trading horizon PT Bank is expected to generate 4.49 times less return on investment than Coca Cola. In addition to that, PT Bank is 4.01 times more volatile than Coca Cola HBC. It trades about 0.01 of its total potential returns per unit of risk. Coca Cola HBC is currently generating about 0.22 per unit of volatility. If you would invest  3,294  in Coca Cola HBC on December 28, 2024 and sell it today you would earn a total of  838.00  from holding Coca Cola HBC or generate 25.44% return on investment over 90 days.

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

PT Bank Rakyat  vs.  Coca Cola HBC

PT Bank Rakyat

Risk-Adjusted Performance

Very Weak

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

Coca Cola HBC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola HBC are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Coca Cola reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Coca Cola

The main advantage of trading using opposite PT Bank and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank 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 PT Bank Rakyat and Coca Cola 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 Commodity Directory module to find actively traded commodities issued by global exchanges.