Correlation Between Coca Cola and Alpha Copper

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

Diversification Opportunities for Coca Cola and Alpha Copper

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Coca and Alpha is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Alpha Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Copper Corp 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 The Coca Cola are associated (or correlated) with Alpha Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Copper Corp has no effect on the direction of Coca Cola i.e., Coca Cola and Alpha Copper go up and down completely randomly.

Pair Corralation between Coca Cola and Alpha Copper

Allowing for the 90-day total investment horizon Coca Cola is expected to generate 12.07 times less return on investment than Alpha Copper. But when comparing it to its historical volatility, The Coca Cola is 9.93 times less risky than Alpha Copper. It trades about 0.15 of its potential returns per unit of risk. Alpha Copper Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Alpha Copper Corp on December 27, 2024 and sell it today you would earn a total of  17.00  from holding Alpha Copper Corp or generate 154.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy96.77%
ValuesDaily Returns

The Coca Cola  vs.  Alpha Copper Corp

 Performance 
       Timeline  
Coca Cola 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in The Coca Cola are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Coca Cola may actually be approaching a critical reversion point that can send shares even higher in April 2025.
Alpha Copper Corp 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Copper Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alpha Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Coca Cola and Alpha Copper Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coca Cola and Alpha Copper

The main advantage of trading using opposite Coca Cola and Alpha Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Alpha Copper 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 Alpha Copper will offset losses from the drop in Alpha Copper's long position.
The idea behind The Coca Cola and Alpha Copper Corp 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.
Check out your portfolio center.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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