Correlation Between Coca Cola and Aguas Andinas
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By analyzing existing cross correlation between Coca Cola Embonor SA and Aguas Andinas SA, you can compare the effects of market volatilities on Coca Cola and Aguas Andinas 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 Coca Cola with a short position of Aguas Andinas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Aguas Andinas.
Diversification Opportunities for Coca Cola and Aguas Andinas
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca and Aguas is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Embonor SA and Aguas Andinas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aguas Andinas SA and Coca Cola 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 Coca Cola Embonor SA are associated (or correlated) with Aguas Andinas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aguas Andinas SA has no effect on the direction of Coca Cola i.e., Coca Cola and Aguas Andinas go up and down completely randomly.
Pair Corralation between Coca Cola and Aguas Andinas
Assuming the 90 days trading horizon Coca Cola Embonor SA is expected to under-perform the Aguas Andinas. But the stock apears to be less risky and, when comparing its historical volatility, Coca Cola Embonor SA is 1.48 times less risky than Aguas Andinas. The stock trades about -0.18 of its potential returns per unit of risk. The Aguas Andinas SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 28,100 in Aguas Andinas SA on August 30, 2024 and sell it today you would earn a total of 1,419 from holding Aguas Andinas SA or generate 5.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola Embonor SA vs. Aguas Andinas SA
Performance |
| Timeline |
| Coca Cola Embonor |
| Aguas Andinas SA |
Coca Cola and Aguas Andinas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Aguas Andinas
The main advantage of trading using opposite Coca Cola and Aguas Andinas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, Aguas Andinas 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 Aguas Andinas will offset losses from the drop in Aguas Andinas' long position.The idea behind Coca Cola Embonor SA and Aguas Andinas SA 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.| Aguas Andinas vs. Multiexport Foods SA | Aguas Andinas vs. LATAM Airlines Group | Aguas Andinas vs. Banco de Credito |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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