Correlation Between Aguas Andinas and Compania

Can any of the company-specific risk be diversified away by investing in both Aguas Andinas and Compania 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 Compania 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 Compania De Inversiones, you can compare the effects of market volatilities on Aguas Andinas and Compania 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 Compania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aguas Andinas and Compania.

Diversification Opportunities for Aguas Andinas and Compania

0.0

Correlation Coefficient

Aguas Andinas  Compania

Pay attention - limited upside

The 3 months correlation between Aguas and Compania is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aguas Andinas SA and Compania De Inversiones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania De Inversiones 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 Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania De Inversiones has no effect on the direction of Aguas Andinas i.e., Aguas Andinas and Compania go up and down completely randomly.

Pair Corralation between Aguas Andinas and Compania

If you would invest  29,321  in Aguas Andinas SA on December 30, 2024 and sell it today you would earn a total of  5,669  from holding Aguas Andinas SA or generate 19.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Aguas Andinas SA  vs.  Compania De Inversiones

Aguas Andinas SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aguas Andinas SA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Aguas Andinas sustained solid returns over the last few months and may actually be approaching a breakup point.

Compania De Inversiones

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compania De Inversiones has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Compania is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Aguas Andinas and Compania

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

The idea behind Aguas Andinas SA and Compania De Inversiones 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.