Correlation Between Aguas Andinas and Enjoy SA

Can any of the company-specific risk be diversified away by investing in both Aguas Andinas and Enjoy SA 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 Aguas Andinas and Enjoy SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aguas Andinas SA and Enjoy SA, you can compare the effects of market volatilities on Aguas Andinas and Enjoy SA 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 Aguas Andinas with a short position of Enjoy SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aguas Andinas and Enjoy SA.

Diversification Opportunities for Aguas Andinas and Enjoy SA

-0.54

Correlation Coefficient

Aguas Andinas  Enjoy SA

Excellent diversification

The 3 months correlation between Aguas and Enjoy is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Aguas Andinas SA and Enjoy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enjoy SA and Aguas Andinas 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 Aguas Andinas SA are associated (or correlated) with Enjoy SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enjoy SA has no effect on the direction of Aguas Andinas i.e., Aguas Andinas and Enjoy SA go up and down completely randomly.

Pair Corralation between Aguas Andinas and Enjoy SA

Assuming the 90 days trading horizon Aguas Andinas SA is expected to generate 0.38 times more return on investment than Enjoy SA. However, Aguas Andinas SA is 2.67 times less risky than Enjoy SA. It trades about 0.06 of its potential returns per unit of risk. Enjoy SA is currently generating about -0.22 per unit of risk. If you would invest  27,600  in Aguas Andinas SA on September 13, 2024 and sell it today you would earn a total of  1,300  from holding Aguas Andinas SA or generate 4.71% return on investment over 90 days.

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

Aguas Andinas SA  vs.  Enjoy SA

Aguas Andinas SA

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aguas Andinas SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Aguas Andinas is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Enjoy SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enjoy SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aguas Andinas and Enjoy SA

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

The idea behind Aguas Andinas SA and Enjoy SA 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.