Correlation Between Coca Cola and Amdocs

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

Diversification Opportunities for Coca Cola and Amdocs

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Coca Cola and Amdocs is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Coca-Cola and Amdocs Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amdocs Limited 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 are associated (or correlated) with Amdocs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amdocs Limited has no effect on the direction of Coca Cola i.e., Coca Cola and Amdocs go up and down completely randomly.

Pair Corralation between Coca Cola and Amdocs

Allowing for the 90-day total investment horizon Coca-Cola is expected to generate 0.76 times more return on investment than Amdocs. However, Coca-Cola is 1.32 times less risky than Amdocs. It trades about 0.2 of its potential returns per unit of risk. Amdocs Limited is currently generating about -0.01 per unit of risk. If you would invest  5,985  in Coca-Cola on August 31, 2022 and sell it today you would earn a total of  263.00  from holding Coca-Cola or generate 4.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Coca-Cola  vs.  Amdocs Limited

 Performance (%) 
       Timeline  
Coca-Cola 
Coca Cola Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Coca-Cola are ranked lower than 2 (%) 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 current stock price mess, may contribute to short-term losses for the institutional investors.

Coca Cola Price Channel

Amdocs Limited 
Amdocs Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Amdocs Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Amdocs is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Amdocs Price Channel

Coca Cola and Amdocs Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coca Cola and Amdocs

The main advantage of trading using opposite Coca Cola and Amdocs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Amdocs 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 Amdocs will offset losses from the drop in Amdocs' long position.
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The idea behind Coca-Cola and Amdocs Limited 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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