Correlation Between Coca Cola and ULTRA CLEAN

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

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

Diversification Opportunities for Coca Cola and ULTRA CLEAN

-0.73

Correlation Coefficient

Coca Cola  ULTRA CLEAN

Pay attention - limited upside

The 3 months correlation between Coca and ULTRA is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola HBC and ULTRA CLEAN HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ULTRA CLEAN HLDGS and Coca Cola 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 Coca Cola HBC are associated (or correlated) with ULTRA CLEAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ULTRA CLEAN HLDGS has no effect on the direction of Coca Cola i.e., Coca Cola and ULTRA CLEAN go up and down completely randomly.

Pair Corralation between Coca Cola and ULTRA CLEAN

Assuming the 90 days horizon Coca Cola HBC is expected to generate 0.43 times more return on investment than ULTRA CLEAN. However, Coca Cola HBC is 2.31 times less risky than ULTRA CLEAN. It trades about 0.22 of its potential returns per unit of risk. ULTRA CLEAN HLDGS is currently generating about -0.16 per unit of risk. 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

Coca Cola HBC  vs.  ULTRA CLEAN HLDGS

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.

ULTRA CLEAN HLDGS

Risk-Adjusted Performance

Very Weak

Over the last 90 days ULTRA CLEAN HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Coca Cola and ULTRA CLEAN

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

The idea behind Coca Cola HBC and ULTRA CLEAN HLDGS 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.