Correlation Between Coca Cola and MIND CTI

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

Diversification Opportunities for Coca Cola and MIND CTI

-0.76
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Coca Cola and MIND CTI

Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the MIND CTI. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.89 times less risky than MIND CTI. The stock trades about -0.04 of its potential returns per unit of risk. The MIND CTI is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  196.00  in MIND CTI on February 28, 2023 and sell it today you would lose (5.00)  from holding MIND CTI or give up 2.55% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

The Coca-Cola  vs.  MIND CTI

 Performance (%) 
       Timeline  
Coca-Cola 

Coca Performance

3 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in The Coca Cola are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Coca Cola is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the insiders.
MIND CTI 

MIND Performance

0 of 100

Over the last 90 days MIND CTI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm insiders.

Coca Cola and MIND CTI Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coca Cola and MIND CTI

The main advantage of trading using opposite Coca Cola and MIND CTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, MIND CTI 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 MIND CTI will offset losses from the drop in MIND CTI's long position.
The idea behind The Coca Cola and MIND CTI 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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