Correlation Between Embotelladora Andina and Performance Food

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

Diversification Opportunities for Embotelladora Andina and Performance Food

0.29

Correlation Coefficient

Embotelladora Andina  Performance Food

Modest diversification

The 3 months correlation between Embotelladora and Performance is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Embotelladora Andina SA and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of Embotelladora Andina i.e., Embotelladora Andina and Performance Food go up and down completely randomly.

Pair Corralation between Embotelladora Andina and Performance Food

Assuming the 90 days trading horizon Embotelladora Andina SA is expected to generate 2.92 times more return on investment than Performance Food. However, Embotelladora Andina is 2.92 times more volatile than Performance Food Group. It trades about 0.16 of its potential returns per unit of risk. Performance Food Group is currently generating about -0.2 per unit of risk. If you would invest  1,610  in Embotelladora Andina SA on October 11, 2024 and sell it today you would earn a total of  130.00  from holding Embotelladora Andina SA or generate 8.07% return on investment over 90 days.

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

Embotelladora Andina SA  vs.  Performance Food Group

Embotelladora Andina

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Embotelladora Andina SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Embotelladora Andina may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Performance Food

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Performance Food may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Embotelladora Andina and Performance Food

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

The idea behind Embotelladora Andina SA and Performance Food Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.