Correlation Between Administradora Americana and Multiexport Foods
Can any of the company-specific risk be diversified away by investing in both Administradora Americana and Multiexport 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 Administradora Americana and Multiexport Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Administradora Americana de and Multiexport Foods SA, you can compare the effects of market volatilities on Administradora Americana and Multiexport 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 Administradora Americana with a short position of Multiexport Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Administradora Americana and Multiexport Foods.
Diversification Opportunities for Administradora Americana and Multiexport Foods
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Administradora and Multiexport is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Administradora Americana de and Multiexport Foods SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multiexport Foods and Administradora Americana 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 Administradora Americana de are associated (or correlated) with Multiexport Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multiexport Foods has no effect on the direction of Administradora Americana i.e., Administradora Americana and Multiexport Foods go up and down completely randomly.
Pair Corralation between Administradora Americana and Multiexport Foods
Assuming the 90 days trading horizon Administradora Americana de is expected to under-perform the Multiexport Foods. But the stock apears to be less risky and, when comparing its historical volatility, Administradora Americana de is 1.17 times less risky than Multiexport Foods. The stock trades about -0.27 of its potential returns per unit of risk. The Multiexport Foods SA is currently generating about 0.85 of returns per unit of risk over similar time horizon. If you would invest 20,405 in Multiexport Foods SA on November 3, 2024 and sell it today you would earn a total of 2,895 from holding Multiexport Foods SA or generate 14.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 86.96% |
| Values | Daily Returns |
Administradora Americana de vs. Multiexport Foods SA
Performance |
| Timeline |
| Administradora Americana |
| Multiexport Foods |
Administradora Americana and Multiexport Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Administradora Americana and Multiexport Foods
The main advantage of trading using opposite Administradora Americana and Multiexport Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Administradora Americana position performs unexpectedly, Multiexport 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 Multiexport Foods will offset losses from the drop in Multiexport Foods' long position.| Administradora Americana vs. Embotelladora Andina SA | Administradora Americana vs. Parq Arauco | Administradora Americana vs. Salfacorp | Administradora Americana vs. Vina Concha To |
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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 Stocks Directory module to find actively traded stocks across global markets.
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