Correlation Between Technical Olympic and Coca Cola

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

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

Diversification Opportunities for Technical Olympic and Coca Cola

-0.28

Correlation Coefficient

Technical Olympic  Coca Cola

Very good diversification

The 3 months correlation between Technical and Coca is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Technical Olympic SA and Coca Cola HBC AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola HBC and Technical Olympic 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 Technical Olympic SA 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 Technical Olympic i.e., Technical Olympic and Coca Cola go up and down completely randomly.

Pair Corralation between Technical Olympic and Coca Cola

Assuming the 90 days trading horizon Technical Olympic SA is expected to under-perform the Coca Cola. In addition to that, Technical Olympic is 1.19 times more volatile than Coca Cola HBC AG. It trades about -0.02 of its total potential returns per unit of risk. Coca Cola HBC AG is currently generating about 0.01 per unit of volatility. If you would invest  3,350  in Coca Cola HBC AG on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Coca Cola HBC AG or generate 0.0% return on investment over 90 days.

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

Technical Olympic SA  vs.  Coca Cola HBC AG

Technical Olympic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Technical Olympic SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Technical Olympic is not utilizing all of its potentials. The recent 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 AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Coca Cola is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Technical Olympic and Coca Cola

The main advantage of trading using opposite Technical Olympic and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technical Olympic 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 Technical Olympic SA and Coca Cola HBC AG 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.