Correlation Between ARCELORMITTAL and Coca Cola

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both ARCELORMITTAL 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 ARCELORMITTAL and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARCELORMITTAL LUXEMBOURG 675 and Coca Cola Consolidated, you can compare the effects of market volatilities on ARCELORMITTAL 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 ARCELORMITTAL with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARCELORMITTAL and Coca Cola.

Diversification Opportunities for ARCELORMITTAL and Coca Cola

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ARCELORMITTAL and Coca is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ARCELORMITTAL LUXEMBOURG 675 and Coca Cola Consolidated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Consolidated and ARCELORMITTAL 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 ARCELORMITTAL LUXEMBOURG 675 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 Consolidated has no effect on the direction of ARCELORMITTAL i.e., ARCELORMITTAL and Coca Cola go up and down completely randomly.

Pair Corralation between ARCELORMITTAL and Coca Cola

Assuming the 90 days trading horizon ARCELORMITTAL LUXEMBOURG 675 is expected to under-perform the Coca Cola. But the bond apears to be less risky and, when comparing its historical volatility, ARCELORMITTAL LUXEMBOURG 675 is 1.16 times less risky than Coca Cola. The bond trades about -0.18 of its potential returns per unit of risk. The Coca Cola Consolidated is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  83,802  in Coca Cola Consolidated on January 19, 2024 and sell it today you would lose (2,638) from holding Coca Cola Consolidated or give up 3.15% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy90.91%
ValuesDaily Returns

ARCELORMITTAL LUXEMBOURG 675  vs.  Coca Cola Consolidated

 Performance 
       Timeline  
ARCELORMITTAL LUXEMB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ARCELORMITTAL LUXEMBOURG 675 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ARCELORMITTAL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Coca Cola Consolidated 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Coca Cola Consolidated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Coca Cola is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ARCELORMITTAL and Coca Cola Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ARCELORMITTAL and Coca Cola

The main advantage of trading using opposite ARCELORMITTAL and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARCELORMITTAL 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 ARCELORMITTAL LUXEMBOURG 675 and Coca Cola Consolidated 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

Other Complementary Tools

Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Bonds Directory
Find actively traded corporate debentures issued by US companies
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
FinTech Suite
Use AI to screen and filter profitable investment opportunities
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
AI Investment Finder
Use AI to screen and filter profitable investment opportunities
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings