Correlation Between Kocaer Celik and Coca Cola

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

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

Diversification Opportunities for Kocaer Celik and Coca Cola

0.72

Correlation Coefficient

Kocaer Celik  Coca Cola

Poor diversification

The 3 months correlation between Kocaer and Coca is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kocaer Celik Sanayi and Coca Cola Icecek AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Icecek and Kocaer Celik 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 Kocaer Celik Sanayi 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 Icecek has no effect on the direction of Kocaer Celik i.e., Kocaer Celik and Coca Cola go up and down completely randomly.

Pair Corralation between Kocaer Celik and Coca Cola

Assuming the 90 days trading horizon Kocaer Celik is expected to generate 3.89 times less return on investment than Coca Cola. But when comparing it to its historical volatility, Kocaer Celik Sanayi is 1.28 times less risky than Coca Cola. It trades about 0.1 of its potential returns per unit of risk. Coca Cola Icecek AS is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  4,978  in Coca Cola Icecek AS on September 23, 2024 and sell it today you would earn a total of  857.00  from holding Coca Cola Icecek AS or generate 17.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Kocaer Celik Sanayi  vs.  Coca Cola Icecek AS

Kocaer Celik Sanayi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kocaer Celik Sanayi are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Kocaer Celik may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Coca Cola Icecek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coca Cola Icecek AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Coca Cola is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kocaer Celik and Coca Cola

The main advantage of trading using opposite Kocaer Celik and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kocaer Celik 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 Kocaer Celik Sanayi and Coca Cola Icecek AS 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.