Correlation Between Coca-Cola Bottlers and Calbee

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

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

Diversification Opportunities for Coca-Cola Bottlers and Calbee

-0.55

Correlation Coefficient

Coca-Cola Bottlers  Calbee

Excellent diversification

The 3 months correlation between Coca-Cola and Calbee is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Bottlers Japan and Calbee Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calbee Inc and Coca-Cola Bottlers 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 Bottlers Japan are associated (or correlated) with Calbee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calbee Inc has no effect on the direction of Coca-Cola Bottlers i.e., Coca-Cola Bottlers and Calbee go up and down completely randomly.

Pair Corralation between Coca-Cola Bottlers and Calbee

Assuming the 90 days horizon Coca Cola Bottlers Japan is expected to generate 2.87 times more return on investment than Calbee. However, Coca-Cola Bottlers is 2.87 times more volatile than Calbee Inc. It trades about 0.05 of its potential returns per unit of risk. Calbee Inc is currently generating about -0.13 per unit of risk. If you would invest  853.00  in Coca Cola Bottlers Japan on October 4, 2024 and sell it today you would earn a total of  22.00  from holding Coca Cola Bottlers Japan or generate 2.58% return on investment over 90 days.

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

Coca Cola Bottlers Japan  vs.  Calbee Inc

Coca Cola Bottlers

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola Bottlers Japan are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward-looking indicators, Coca-Cola Bottlers showed solid returns over the last few months and may actually be approaching a breakup point.

Calbee Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calbee Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Coca-Cola Bottlers and Calbee

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

The idea behind Coca Cola Bottlers Japan and Calbee Inc 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.