Correlation Between Daios Plastics and Coca Cola

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

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

Diversification Opportunities for Daios Plastics and Coca Cola

0.34

Correlation Coefficient

Daios Plastics  Coca Cola

Weak diversification

The 3 months correlation between Daios and Coca is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Daios Plastics SA and Coca Cola HBC AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola HBC and Daios Plastics 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 Daios Plastics SA 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 Daios Plastics i.e., Daios Plastics and Coca Cola go up and down completely randomly.

Pair Corralation between Daios Plastics and Coca Cola

Assuming the 90 days trading horizon Daios Plastics SA is expected to generate 3.49 times more return on investment than Coca Cola. However, Daios Plastics is 3.49 times more volatile than Coca Cola HBC AG. It trades about 0.05 of its potential returns per unit of risk. Coca Cola HBC AG is currently generating about 0.03 per unit of risk. If you would invest  328.00  in Daios Plastics SA on September 5, 2024 and sell it today you would earn a total of  30.00  from holding Daios Plastics SA or generate 9.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Daios Plastics SA  vs.  Coca Cola HBC AG

Daios Plastics SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Daios Plastics SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daios Plastics sustained solid returns over the last few months and may actually be approaching a breakup point.

Coca Cola HBC

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola HBC AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Coca Cola is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Daios Plastics and Coca Cola

The main advantage of trading using opposite Daios Plastics and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daios Plastics 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 Daios Plastics SA and Coca Cola HBC AG 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.