Correlation Between Enjoy SA and Aguas Andinas

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Can any of the company-specific risk be diversified away by investing in both Enjoy SA and Aguas Andinas 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 Enjoy SA and Aguas Andinas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enjoy SA and Aguas Andinas SA, you can compare the effects of market volatilities on Enjoy SA 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 Enjoy SA with a short position of Aguas Andinas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enjoy SA and Aguas Andinas.

Diversification Opportunities for Enjoy SA and Aguas Andinas

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between Enjoy and Aguas is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Enjoy 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 Enjoy SA 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 Enjoy 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 Enjoy SA i.e., Enjoy SA and Aguas Andinas go up and down completely randomly.

Pair Corralation between Enjoy SA and Aguas Andinas

Assuming the 90 days trading horizon Enjoy SA is expected to under-perform the Aguas Andinas. In addition to that, Enjoy SA is 2.11 times more volatile than Aguas Andinas SA. It trades about -0.29 of its total potential returns per unit of risk. Aguas Andinas SA is currently generating about 0.13 per unit of volatility. 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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Enjoy SA  vs.  Aguas Andinas SA

 Performance 
       Timeline  
Enjoy SA 

Risk-Adjusted Performance

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Over the last 90 days Enjoy SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Aguas Andinas SA 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Aguas Andinas SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aguas Andinas may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Enjoy SA and Aguas Andinas Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Enjoy SA and Aguas Andinas

The main advantage of trading using opposite Enjoy SA and Aguas Andinas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enjoy SA 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.
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The idea behind Enjoy 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.
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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