Correlation Between Embotelladora Andina and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Embotelladora Andina and Coca Cola 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 Coca Cola 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 Coca Cola Consolidated, you can compare the effects of market volatilities on Embotelladora Andina and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embotelladora Andina and Coca Cola.
Diversification Opportunities for Embotelladora Andina and Coca Cola
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Embotelladora and Coca is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Embotelladora Andina SA and Coca Cola Consolidated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Consolidated 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola Consolidated has no effect on the direction of Embotelladora Andina i.e., Embotelladora Andina and Coca Cola go up and down completely randomly.
Pair Corralation between Embotelladora Andina and Coca Cola
Assuming the 90 days horizon Embotelladora Andina SA is expected to under-perform the Coca Cola. In addition to that, Embotelladora Andina is 1.2 times more volatile than Coca Cola Consolidated. It trades about -0.02 of its total potential returns per unit of risk. Coca Cola Consolidated is currently generating about 0.18 per unit of volatility. If you would invest 120,961 in Coca Cola Consolidated on August 30, 2024 and sell it today you would earn a total of 10,279 from holding Coca Cola Consolidated or generate 8.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Embotelladora Andina SA vs. Coca Cola Consolidated
Performance |
| Timeline |
| Embotelladora Andina |
| Coca Cola Consolidated |
Embotelladora Andina and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embotelladora Andina and Coca Cola
The main advantage of trading using opposite Embotelladora Andina and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embotelladora Andina position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.| Embotelladora Andina vs. Embotelladora Andina SA | Embotelladora Andina vs. Signet International Holdings | Embotelladora Andina vs. National Beverage Corp | Embotelladora Andina vs. PT Astra International |
| Coca Cola vs. The Coca Cola | Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Keurig Dr Pepper |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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