Correlation Between Embotelladora Andina and Apple Rush

Can any of the company-specific risk be diversified away by investing in both Embotelladora Andina and Apple Rush 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 Embotelladora Andina and Apple Rush into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Embotelladora Andina and Apple Rush

0.39

Correlation Coefficient

Embotelladora Andina  Apple Rush

Weak diversification

The 3 months correlation between Embotelladora and Apple is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Embotelladora Andina SA and Apple Rush in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Rush and Embotelladora Andina 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 Embotelladora Andina SA are associated (or correlated) with Apple Rush. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Rush has no effect on the direction of Embotelladora Andina i.e., Embotelladora Andina and Apple Rush go up and down completely randomly.

Pair Corralation between Embotelladora Andina and Apple Rush

Assuming the 90 days horizon Embotelladora Andina is expected to generate 5.11 times less return on investment than Apple Rush. But when comparing it to its historical volatility, Embotelladora Andina SA is 3.76 times less risky than Apple Rush. It trades about 0.04 of its potential returns per unit of risk. Apple Rush is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.17  in Apple Rush on September 9, 2024 and sell it today you would earn a total of  0.04  from holding Apple Rush or generate 23.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Embotelladora Andina SA  vs.  Apple Rush

Embotelladora Andina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embotelladora Andina SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Embotelladora Andina is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Apple Rush

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Rush has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Apple Rush is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Embotelladora Andina and Apple Rush

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

The idea behind Embotelladora Andina SA and Apple Rush 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.