Correlation Between UmweltBank and Coca Cola

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

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

Diversification Opportunities for UmweltBank and Coca Cola

-0.82

Correlation Coefficient

UmweltBank  Coca Cola

Pay attention - limited upside

The 3 months correlation between UmweltBank and Coca is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding UmweltBank AG and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and UmweltBank 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 UmweltBank AG 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 has no effect on the direction of UmweltBank i.e., UmweltBank and Coca Cola go up and down completely randomly.

Pair Corralation between UmweltBank and Coca Cola

Assuming the 90 days trading horizon UmweltBank AG is expected to under-perform the Coca Cola. In addition to that, UmweltBank is 1.33 times more volatile than The Coca Cola. It trades about -0.16 of its total potential returns per unit of risk. The Coca Cola is currently generating about 0.09 per unit of volatility. If you would invest  5,901  in The Coca Cola on December 23, 2024 and sell it today you would earn a total of  438.00  from holding The Coca Cola or generate 7.42% return on investment over 90 days.

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

UmweltBank AG  vs.  The Coca Cola

UmweltBank AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days UmweltBank AG 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Coca Cola

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Coca Cola are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, Coca Cola may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with UmweltBank and Coca Cola

The main advantage of trading using opposite UmweltBank and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UmweltBank 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 UmweltBank AG and The Coca Cola 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.