Correlation Between Coca Cola and First Solar

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

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

Diversification Opportunities for Coca Cola and First Solar

-0.32

Correlation Coefficient

Coca Cola  First Solar

Very good diversification

The 3 months correlation between Coca and First is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and First Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Solar 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 The Coca Cola are associated (or correlated) with First Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Solar has no effect on the direction of Coca Cola i.e., Coca Cola and First Solar go up and down completely randomly.

Pair Corralation between Coca Cola and First Solar

Allowing for the 90-day total investment horizon Coca Cola is expected to generate 12.15 times less return on investment than First Solar. But when comparing it to its historical volatility, The Coca Cola is 3.32 times less risky than First Solar. It trades about 0.05 of its potential returns per unit of risk. First Solar is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  17,913  in First Solar on July 30, 2025 and sell it today you would earn a total of  6,856  from holding First Solar or generate 38.27% return on investment over 90 days.

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

The Coca Cola  vs.  First Solar

Coca Cola

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in The Coca Cola are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

First Solar

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Solar are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, First Solar reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coca Cola and First Solar

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

The idea behind The Coca Cola and First Solar 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.