Correlation Between Coca Cola and OFX Group

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

Diversification Opportunities for Coca Cola and OFX Group

0.0

Correlation Coefficient

Coca Cola  OFX Group

Pay attention - limited upside

The 3 months correlation between Coca and OFX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group 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 OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of Coca Cola i.e., Coca Cola and OFX Group go up and down completely randomly.

Pair Corralation between Coca Cola and OFX Group

Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.61 times more return on investment than OFX Group. However, The Coca Cola is 1.64 times less risky than OFX Group. It trades about 0.16 of its potential returns per unit of risk. OFX Group Ltd is currently generating about -0.13 per unit of risk. If you would invest  6,211  in The Coca Cola on December 26, 2024 and sell it today you would earn a total of  791.00  from holding The Coca Cola or generate 12.74% return on investment over 90 days.

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

The Coca Cola  vs.  OFX Group Ltd

Coca Cola

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Coca Cola are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Coca Cola displayed solid returns over the last few months and may actually be approaching a breakup point.

OFX Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days OFX Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Coca Cola and OFX Group

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

The idea behind The Coca Cola and OFX Group Ltd 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.