Correlation Between Coca Cola and Nongfu Spring

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Can any of the company-specific risk be diversified away by investing in both Coca Cola and Nongfu Spring 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 Nongfu Spring into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca-Cola Co and Nongfu Spring Co, you can compare the effects of market volatilities on Coca Cola and Nongfu Spring 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 Nongfu Spring. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Nongfu Spring.

Diversification Opportunities for Coca Cola and Nongfu Spring

  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Coca Cola and Nongfu is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Coca-Cola Co and Nongfu Spring Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nongfu Spring 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 Coca-Cola Co are associated (or correlated) with Nongfu Spring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nongfu Spring has no effect on the direction of Coca Cola i.e., Coca Cola and Nongfu Spring go up and down completely randomly.

Pair Corralation between Coca Cola and Nongfu Spring

If you would invest  576.00  in Nongfu Spring Co on November 4, 2022 and sell it today you would earn a total of  0.00  from holding Nongfu Spring Co or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
ValuesDaily Returns

Coca-Cola Co  vs.  Nongfu Spring Co

 Performance (%) 
Coca Cola Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Coca-Cola Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Coca Cola is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Coca Cola Price Channel

Nongfu Spring 
Nongfu Performance
0 of 100
Over the last 90 days Nongfu Spring Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Nongfu Spring is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nongfu Price Channel

Coca Cola and Nongfu Spring Volatility Contrast

   Predicted Return Density   

Pair Trading with Coca Cola and Nongfu Spring

The main advantage of trading using opposite Coca Cola and Nongfu Spring positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Nongfu Spring 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 Nongfu Spring will offset losses from the drop in Nongfu Spring's long position.
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The idea behind Coca-Cola Co and Nongfu Spring Co 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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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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