Correlation Between Coca Cola and Logistics Innovation

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

Diversification Opportunities for Coca Cola and Logistics Innovation

-0.75

Correlation Coefficient

Coca Cola  Logistics Innovation

Pay attention - limited upside

The 3 months correlation between Coca and Logistics is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Logistics Innovation Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logistics Innovation 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 Logistics Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logistics Innovation has no effect on the direction of Coca Cola i.e., Coca Cola and Logistics Innovation go up and down completely randomly.

Pair Corralation between Coca Cola and Logistics Innovation

Allowing for the 90-day total investment horizon Coca Cola is expected to generate 1.96 times less return on investment than Logistics Innovation. In addition to that, Coca Cola is 2.94 times more volatile than Logistics Innovation Technologies. It trades about 0.02 of its total potential returns per unit of risk. Logistics Innovation Technologies is currently generating about 0.09 per unit of volatility. If you would invest  995.00  in Logistics Innovation Technologies on September 18, 2024 and sell it today you would earn a total of  29.00  from holding Logistics Innovation Technologies or generate 2.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	24.04%
Values	Daily Returns

The Coca Cola  vs.  Logistics Innovation Technolog

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 fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Logistics Innovation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Logistics Innovation Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Logistics Innovation is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Coca Cola and Logistics Innovation

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

The idea behind The Coca Cola and Logistics Innovation Technologies 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.