Correlation Between GOLD ROAD and Coca Cola

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

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

Diversification Opportunities for GOLD ROAD and Coca Cola

-0.4

Correlation Coefficient

GOLD ROAD  Coca Cola

Very good diversification

The 3 months correlation between GOLD and Coca is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and GOLD ROAD 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 GOLD ROAD RES 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 has no effect on the direction of GOLD ROAD i.e., GOLD ROAD and Coca Cola go up and down completely randomly.

Pair Corralation between GOLD ROAD and Coca Cola

Assuming the 90 days trading horizon GOLD ROAD RES is expected to generate 3.14 times more return on investment than Coca Cola. However, GOLD ROAD is 3.14 times more volatile than The Coca Cola. It trades about 0.08 of its potential returns per unit of risk. The Coca Cola is currently generating about -0.07 per unit of risk. If you would invest  113.00  in GOLD ROAD RES on September 26, 2024 and sell it today you would earn a total of  9.00  from holding GOLD ROAD RES or generate 7.96% return on investment over 90 days.

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

GOLD ROAD RES  vs.  The Coca Cola

GOLD ROAD RES

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GOLD ROAD RES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, GOLD ROAD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Coca Cola

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Coca Cola has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Coca Cola is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GOLD ROAD and Coca Cola

The main advantage of trading using opposite GOLD ROAD and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLD ROAD 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 GOLD ROAD RES and The Coca Cola 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.