Correlation Between Kerry Group and Coca Cola

Can any of the company-specific risk be diversified away by investing in both Kerry Group and Coca Cola 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 Kerry Group and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kerry Group PLC and Coca Cola HBC, you can compare the effects of market volatilities on Kerry Group and Coca Cola 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 Kerry Group with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kerry Group and Coca Cola.

Diversification Opportunities for Kerry Group and Coca Cola

0.27

Correlation Coefficient

Kerry Group  Coca Cola

Modest diversification

The 3 months correlation between Kerry and Coca is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kerry Group PLC and Coca Cola HBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola HBC and Kerry Group 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 Kerry Group PLC are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola HBC has no effect on the direction of Kerry Group i.e., Kerry Group and Coca Cola go up and down completely randomly.

Pair Corralation between Kerry Group and Coca Cola

Assuming the 90 days horizon Kerry Group is expected to generate 10.44 times less return on investment than Coca Cola. In addition to that, Kerry Group is 1.02 times more volatile than Coca Cola HBC. It trades about 0.02 of its total potential returns per unit of risk. Coca Cola HBC is currently generating about 0.17 per unit of volatility. If you would invest  2,290  in Coca Cola HBC on October 4, 2024 and sell it today you would earn a total of  773.00  from holding Coca Cola HBC or generate 33.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	26.67%
Values	Daily Returns

Kerry Group PLC  vs.  Coca Cola HBC

Kerry Group PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kerry Group PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Kerry Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Coca Cola HBC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coca Cola HBC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Coca Cola is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kerry Group and Coca Cola

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

The idea behind Kerry Group PLC and Coca Cola HBC 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 Transaction History module to view history of all your transactions and understand their impact on performance.