Correlation Between Embotelladora Andina and GigaMedia
Can any of the company-specific risk be diversified away by investing in both Embotelladora Andina and GigaMedia 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 GigaMedia 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 GigaMedia, you can compare the effects of market volatilities on Embotelladora Andina and GigaMedia 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 GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embotelladora Andina and GigaMedia.
Diversification Opportunities for Embotelladora Andina and GigaMedia
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Embotelladora and GigaMedia is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Embotelladora Andina SA and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia 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 GigaMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigaMedia has no effect on the direction of Embotelladora Andina i.e., Embotelladora Andina and GigaMedia go up and down completely randomly.
Pair Corralation between Embotelladora Andina and GigaMedia
Assuming the 90 days trading horizon Embotelladora Andina SA is expected to generate 4.09 times more return on investment than GigaMedia. However, Embotelladora Andina is 4.09 times more volatile than GigaMedia. It trades about 0.15 of its potential returns per unit of risk. GigaMedia is currently generating about -0.05 per unit of risk. If you would invest 1,550 in Embotelladora Andina SA on September 13, 2024 and sell it today you would earn a total of 130.00 from holding Embotelladora Andina SA or generate 8.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Embotelladora Andina SA vs. GigaMedia
Performance |
| Timeline |
| Embotelladora Andina |
| GigaMedia |
Embotelladora Andina and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embotelladora Andina and GigaMedia
The main advantage of trading using opposite Embotelladora Andina and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embotelladora Andina position performs unexpectedly, GigaMedia 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 GigaMedia will offset losses from the drop in GigaMedia's long position.| Embotelladora Andina vs. Tradegate AG Wertpapierhandelsbank | Embotelladora Andina vs. Webster Financial | Embotelladora Andina vs. KAUFMAN ET BROAD | Embotelladora Andina vs. Regions Financial |
| GigaMedia vs. AOYAMA TRADING | GigaMedia vs. REGAL ASIAN INVESTMENTS | GigaMedia vs. AM EAGLE OUTFITTERS | GigaMedia vs. HK Electric Investments |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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