Correlation Between Coca Cola and VanEck Indonesia

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

Diversification Opportunities for Coca Cola and VanEck Indonesia

0.92

Correlation Coefficient

Coca Cola  VanEck Indonesia

Almost no diversification

The 3 months correlation between Coca and VanEck is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and VanEck Indonesia Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Indonesia Index 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 VanEck Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Indonesia Index has no effect on the direction of Coca Cola i.e., Coca Cola and VanEck Indonesia go up and down completely randomly.

Pair Corralation between Coca Cola and VanEck Indonesia

Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the VanEck Indonesia. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.53 times less risky than VanEck Indonesia. The stock trades about -0.02 of its potential returns per unit of risk. The VanEck Indonesia Index is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,641  in VanEck Indonesia Index on September 12, 2024 and sell it today you would earn a total of  37.00  from holding VanEck Indonesia Index or generate 2.25% return on investment over 90 days.

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

The Coca Cola  vs.  VanEck Indonesia Index

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.

VanEck Indonesia Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Indonesia Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Coca Cola and VanEck Indonesia

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

The idea behind The Coca Cola and VanEck Indonesia Index 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.