Correlation Between Embotelladora Andina and Superior Plus

Can any of the company-specific risk be diversified away by investing in both Embotelladora Andina and Superior Plus 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 Superior Plus 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 Superior Plus Corp, you can compare the effects of market volatilities on Embotelladora Andina and Superior Plus 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 Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embotelladora Andina and Superior Plus.

Diversification Opportunities for Embotelladora Andina and Superior Plus

-0.18

Correlation Coefficient

Embotelladora Andina  Superior Plus

Good diversification

The 3 months correlation between Embotelladora and Superior is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Embotelladora Andina SA and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp 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 Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of Embotelladora Andina i.e., Embotelladora Andina and Superior Plus go up and down completely randomly.

Pair Corralation between Embotelladora Andina and Superior Plus

Assuming the 90 days trading horizon Embotelladora Andina SA is expected to generate 1.22 times more return on investment than Superior Plus. However, Embotelladora Andina is 1.22 times more volatile than Superior Plus Corp. It trades about 0.15 of its potential returns per unit of risk. Superior Plus Corp is currently generating about 0.01 per unit of risk. If you would invest  1,601  in Embotelladora Andina SA on December 25, 2024 and sell it today you would earn a total of  359.00  from holding Embotelladora Andina SA or generate 22.42% return on investment over 90 days.

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

Embotelladora Andina SA  vs.  Superior Plus Corp

Embotelladora Andina

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embotelladora Andina SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Embotelladora Andina reported solid returns over the last few months and may actually be approaching a breakup point.

Superior Plus Corp

Risk-Adjusted Performance

Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Superior Plus is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Embotelladora Andina and Superior Plus

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

The idea behind Embotelladora Andina SA and Superior Plus Corp 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.