Correlation Between Atai Life and Coca Cola

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

Diversification Opportunities for Atai Life and Coca Cola

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Atai Life and Coca Cola is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Atai Life Sciences and Coca-Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca-Cola and Atai Life 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 Atai Life Sciences 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 Atai Life i.e., Atai Life and Coca Cola go up and down completely randomly.

Pair Corralation between Atai Life and Coca Cola

Given the investment horizon of 90 days Atai Life Sciences is expected to under-perform the Coca Cola. In addition to that, Atai Life is 4.23 times more volatile than Coca-Cola. It trades about -0.09 of its total potential returns per unit of risk. Coca-Cola is currently generating about 0.04 per unit of volatility. If you would invest  4,716  in Coca-Cola on July 6, 2022 and sell it today you would earn a total of  962.00  from holding Coca-Cola or generate 20.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy65.79%
ValuesDaily Returns

Atai Life Sciences  vs.  Coca-Cola

 Performance (%) 
       Timeline  
Atai Life Sciences 
Atai Life Performance
0 of 100
Over the last 90 days Atai Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Atai Life Price Channel

Coca-Cola 
Coca Cola Performance
0 of 100
Over the last 90 days Coca-Cola has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Coca Cola Price Channel

Atai Life and Coca Cola Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Atai Life and Coca Cola

The main advantage of trading using opposite Atai Life and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atai Life 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.
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The idea behind Atai Life Sciences and 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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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 Piotroski F Score module to get Piotroski F Score based on binary analysis strategy of nine different fundamentals.

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