Correlation Between Vina Concha and AFP Habitat

Can any of the company-specific risk be diversified away by investing in both Vina Concha and AFP Habitat 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 Vina Concha and AFP Habitat into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vina Concha To and AFP Habitat, you can compare the effects of market volatilities on Vina Concha and AFP Habitat 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 Vina Concha with a short position of AFP Habitat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vina Concha and AFP Habitat.

Diversification Opportunities for Vina Concha and AFP Habitat

0.28

Correlation Coefficient

Vina Concha  AFP Habitat

Modest diversification

The 3 months correlation between Vina and AFP is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vina Concha To and AFP Habitat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFP Habitat and Vina Concha 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 Vina Concha To are associated (or correlated) with AFP Habitat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFP Habitat has no effect on the direction of Vina Concha i.e., Vina Concha and AFP Habitat go up and down completely randomly.

Pair Corralation between Vina Concha and AFP Habitat

Assuming the 90 days trading horizon Vina Concha To is expected to under-perform the AFP Habitat. In addition to that, Vina Concha is 1.13 times more volatile than AFP Habitat. It trades about -0.08 of its total potential returns per unit of risk. AFP Habitat is currently generating about -0.02 per unit of volatility. If you would invest  85,859  in AFP Habitat on September 5, 2024 and sell it today you would lose (893.00) from holding AFP Habitat or give up 1.04% of portfolio value over 90 days.

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

Vina Concha To  vs.  AFP Habitat

Vina Concha To

Risk-Adjusted Performance

0 of 100

Very Weak

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

AFP Habitat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFP Habitat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, AFP Habitat 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 Vina Concha and AFP Habitat

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

The idea behind Vina Concha To and AFP Habitat 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.