Correlation Between Coca Cola and Tinka Resources

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

Diversification Opportunities for Coca Cola and Tinka Resources

0.76

Correlation Coefficient

Coca Cola  Tinka Resources

Poor diversification

The 3 months correlation between Coca and Tinka is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Tinka Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tinka Resources 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 Tinka Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tinka Resources has no effect on the direction of Coca Cola i.e., Coca Cola and Tinka Resources go up and down completely randomly.

Pair Corralation between Coca Cola and Tinka Resources

Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.09 times more return on investment than Tinka Resources. However, The Coca Cola is 11.25 times less risky than Tinka Resources. It trades about -0.18 of its potential returns per unit of risk. Tinka Resources Limited is currently generating about -0.04 per unit of risk. If you would invest  6,260  in The Coca Cola on October 8, 2024 and sell it today you would lose (179.00) from holding The Coca Cola or give up 2.86% of portfolio value over 90 days.

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

The Coca Cola  vs.  Tinka Resources Limited

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 weak 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.

Tinka Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tinka Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Coca Cola and Tinka Resources

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

The idea behind The Coca Cola and Tinka Resources Limited 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.