Correlation Between Coca Cola and COCA A

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Can any of the company-specific risk be diversified away by investing in both Coca Cola and COCA A 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 COCA A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola FEMSA SAB and COCA A HBC, you can compare the effects of market volatilities on Coca Cola and COCA A 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 COCA A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and COCA A.

Diversification Opportunities for Coca Cola and COCA A

CocaCOCADiversified AwayCocaCOCADiversified Away100%
0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Coca and COCA is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola FEMSA SAB and COCA A HBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A HBC 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 FEMSA SAB are associated (or correlated) with COCA A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A HBC has no effect on the direction of Coca Cola i.e., Coca Cola and COCA A go up and down completely randomly.

Pair Corralation between Coca Cola and COCA A

Assuming the 90 days trading horizon Coca Cola is expected to generate 1.44 times less return on investment than COCA A. But when comparing it to its historical volatility, Coca Cola FEMSA SAB is 1.24 times less risky than COCA A. It trades about 0.14 of its potential returns per unit of risk. COCA A HBC is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,260  in COCA A HBC on November 19, 2024 and sell it today you would earn a total of  540.00  from holding COCA A HBC or generate 16.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Coca Cola FEMSA SAB  vs.  COCA A HBC

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505
JavaScript chart by amCharts 3.21.15CFSL CCKC
       Timeline  
Coca Cola FEMSA 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola FEMSA SAB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Coca Cola may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7274767880
COCA A HBC 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in COCA A HBC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, COCA A reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb32333435363738

Coca Cola and COCA A Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.26-3.19-2.12-1.050.01.092.193.34.41 0.050.100.150.20
JavaScript chart by amCharts 3.21.15CFSL CCKC
       Returns  

Pair Trading with Coca Cola and COCA A

The main advantage of trading using opposite Coca Cola and COCA A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, COCA A 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 A will offset losses from the drop in COCA A's long position.
The idea behind Coca Cola FEMSA SAB and COCA A 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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