Correlation Between Coca Cola and Titan Cement

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

By analyzing existing cross correlation between Coca Cola HBC AG and Titan Cement International, you can compare the effects of market volatilities on Coca Cola and Titan Cement 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 Titan Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Titan Cement.

Diversification Opportunities for Coca Cola and Titan Cement

-0.08

Correlation Coefficient

Coca Cola  Titan Cement

Good diversification

The 3 months correlation between Coca and Titan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola HBC AG and Titan Cement International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Cement Interna 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 AG are associated (or correlated) with Titan Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Cement Interna has no effect on the direction of Coca Cola i.e., Coca Cola and Titan Cement go up and down completely randomly.

Pair Corralation between Coca Cola and Titan Cement

Assuming the 90 days trading horizon Coca Cola HBC AG is expected to under-perform the Titan Cement. But the stock apears to be less risky and, when comparing its historical volatility, Coca Cola HBC AG is 1.21 times less risky than Titan Cement. The stock trades about -0.06 of its potential returns per unit of risk. The Titan Cement International is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  3,800  in Titan Cement International on October 26, 2024 and sell it today you would earn a total of  730.00  from holding Titan Cement International or generate 19.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

Coca Cola HBC AG  vs.  Titan Cement International

Coca Cola HBC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola HBC AG are ranked lower than 1 (%) 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.

Titan Cement Interna

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Cement International are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Titan Cement unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coca Cola and Titan Cement

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

The idea behind Coca Cola HBC AG and Titan Cement International 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 Global Correlations module to find global opportunities by holding instruments from different markets.