Correlation Between Active Health and Embotelladora Andina
Can any of the company-specific risk be diversified away by investing in both Active Health and Embotelladora Andina 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 Active Health and Embotelladora Andina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Active Health Foods and Embotelladora Andina SA, you can compare the effects of market volatilities on Active Health and Embotelladora Andina 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 Active Health with a short position of Embotelladora Andina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Active Health and Embotelladora Andina.
Diversification Opportunities for Active Health and Embotelladora Andina
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Active and Embotelladora is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Active Health Foods and Embotelladora Andina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embotelladora Andina and Active Health 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 Active Health Foods are associated (or correlated) with Embotelladora Andina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embotelladora Andina has no effect on the direction of Active Health i.e., Active Health and Embotelladora Andina go up and down completely randomly.
Pair Corralation between Active Health and Embotelladora Andina
Given the investment horizon of 90 days Active Health Foods is expected to generate 20.82 times more return on investment than Embotelladora Andina. However, Active Health is 20.82 times more volatile than Embotelladora Andina SA. It trades about 0.06 of its potential returns per unit of risk. Embotelladora Andina SA is currently generating about 0.05 per unit of risk. If you would invest 0.03 in Active Health Foods on August 29, 2024 and sell it today you would lose (0.02) from holding Active Health Foods or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.19% |
| Values | Daily Returns |
Active Health Foods vs. Embotelladora Andina SA
Performance |
| Timeline |
| Active Health Foods |
| Embotelladora Andina |
Active Health and Embotelladora Andina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Active Health and Embotelladora Andina
The main advantage of trading using opposite Active Health and Embotelladora Andina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Active Health position performs unexpectedly, Embotelladora Andina 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 Embotelladora Andina will offset losses from the drop in Embotelladora Andina's long position.| Active Health vs. Embotelladora Andina SA | Active Health vs. Signet International Holdings | Active Health vs. National Beverage Corp | Active Health vs. PT Astra International |
| Embotelladora Andina vs. Signet International Holdings | Embotelladora Andina vs. National Beverage Corp | Embotelladora Andina vs. PT Astra International | Embotelladora Andina vs. Embotelladora Andina SA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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