Correlation Between Coca Cola and Information Services

Can any of the company-specific risk be diversified away by investing in both Coca Cola and Information Services 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 Information Services into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coca Cola CDR and Information Services, you can compare the effects of market volatilities on Coca Cola and Information Services 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 Information Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Information Services.

Diversification Opportunities for Coca Cola and Information Services

-0.78

Correlation Coefficient

Coca Cola  Information Services

Pay attention - limited upside

The 3 months correlation between Coca and Information is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola CDR and Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 CDR are associated (or correlated) with Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of Coca Cola i.e., Coca Cola and Information Services go up and down completely randomly.

Pair Corralation between Coca Cola and Information Services

Assuming the 90 days trading horizon Coca Cola CDR is expected to under-perform the Information Services. But the stock apears to be less risky and, when comparing its historical volatility, Coca Cola CDR is 2.31 times less risky than Information Services. The stock trades about -0.06 of its potential returns per unit of risk. The Information Services is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,230  in Information Services on July 15, 2025 and sell it today you would earn a total of  350.00  from holding Information Services or generate 10.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Coca Cola CDR  vs.  Information Services

Coca Cola CDR

Risk-Adjusted Performance

Weakest

Over the last 90 days Coca Cola CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Coca Cola is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Information Services

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Information Services may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Coca Cola and Information Services

The main advantage of trading using opposite Coca Cola and Information Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Information Services 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 Information Services will offset losses from the drop in Information Services' long position.

The idea behind Coca Cola CDR and Information Services 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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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.