Correlation Between Coca Cola and GRPH Old

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

Diversification Opportunities for Coca Cola and GRPH Old

0.42

Correlation Coefficient

Coca Cola  GRPH Old

Very weak diversification

The 3 months correlation between Coca and GRPH is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and GRPH Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRPH Old 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 GRPH Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRPH Old has no effect on the direction of Coca Cola i.e., Coca Cola and GRPH Old go up and down completely randomly.

Pair Corralation between Coca Cola and GRPH Old

If you would invest  267.00  in GRPH Old on October 25, 2024 and sell it today you would earn a total of  0.00  from holding GRPH Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	5.26%
Values	Daily Returns

The Coca Cola  vs.  GRPH Old

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.

GRPH Old

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Coca Cola and GRPH Old

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

The idea behind The Coca Cola and GRPH Old 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.