Correlation Between Enjoy SA and Embotelladora Andina

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

Diversification Opportunities for Enjoy SA and Embotelladora Andina

-0.5
  Correlation Coefficient

Very good diversification

The 3 months correlation between Enjoy and Embotelladora is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Enjoy SA and Embotelladora Andina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embotelladora Andina 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 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 Enjoy SA i.e., Enjoy SA and Embotelladora Andina go up and down completely randomly.

Pair Corralation between Enjoy SA and Embotelladora Andina

Assuming the 90 days trading horizon Enjoy SA is expected to under-perform the Embotelladora Andina. In addition to that, Enjoy SA is 2.04 times more volatile than Embotelladora Andina SA. It trades about -0.21 of its total potential returns per unit of risk. Embotelladora Andina SA is currently generating about 0.41 per unit of volatility. If you would invest  233,000  in Embotelladora Andina SA on October 26, 2024 and sell it today you would earn a total of  16,700  from holding Embotelladora Andina SA or generate 7.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.0%
ValuesDaily Returns

Enjoy SA  vs.  Embotelladora Andina SA

 Performance 
       Timeline  
Enjoy SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Embotelladora Andina 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Embotelladora Andina SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Embotelladora Andina sustained solid returns over the last few months and may actually be approaching a breakup point.

Enjoy SA and Embotelladora Andina Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Enjoy SA and Embotelladora Andina

The main advantage of trading using opposite Enjoy SA and Embotelladora Andina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enjoy SA 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.
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The idea behind Enjoy SA and Embotelladora Andina 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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