Correlation Between Coca Cola and Golden Star

Can any of the company-specific risk be diversified away by investing in both Coca Cola and Golden Star 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 Golden Star 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 Golden Star Acquisition, you can compare the effects of market volatilities on Coca Cola and Golden Star 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 Golden Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Golden Star.

Diversification Opportunities for Coca Cola and Golden Star

-0.32

Correlation Coefficient

Coca Cola  Golden Star

Very good diversification

The 3 months correlation between Coca and Golden is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Golden Star Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Star Acquisition 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 Golden Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Star Acquisition has no effect on the direction of Coca Cola i.e., Coca Cola and Golden Star go up and down completely randomly.

Pair Corralation between Coca Cola and Golden Star

Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Golden Star. In addition to that, Coca Cola is 2.41 times more volatile than Golden Star Acquisition. It trades about -0.08 of its total potential returns per unit of risk. Golden Star Acquisition is currently generating about -0.02 per unit of volatility. If you would invest  1,149  in Golden Star Acquisition on October 12, 2024 and sell it today you would lose (2.00) from holding Golden Star Acquisition or give up 0.17% of portfolio value over 90 days.

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

The Coca Cola  vs.  Golden Star Acquisition

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 latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Golden Star Acquisition

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Star Acquisition are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Golden Star is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Coca Cola and Golden Star

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

The idea behind The Coca Cola and Golden Star Acquisition 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.