Correlation Between Aguas Andinas and Invertec Foods

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

Diversification Opportunities for Aguas Andinas and Invertec Foods

0.0

Correlation Coefficient

Aguas Andinas  Invertec Foods

Pay attention - limited upside

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

Pair Corralation between Aguas Andinas and Invertec Foods

If you would invest  26,960  in Aguas Andinas SA on September 12, 2024 and sell it today you would earn a total of  1,940  from holding Aguas Andinas SA or generate 7.2% 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.  Invertec Foods SA

Aguas Andinas SA

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aguas Andinas SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Aguas Andinas may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Invertec Foods SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invertec Foods SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Invertec Foods is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aguas Andinas and Invertec Foods

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

The idea behind Aguas Andinas SA and Invertec Foods 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.