Correlation Between Coca Cola and Embotelladora Andina
Can any of the company-specific risk be diversified away by investing in both Coca Cola 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 Coca Cola and Embotelladora Andina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Coca Cola and Embotelladora Andina SA, you can compare the effects of market volatilities on Coca Cola 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 Coca Cola with a short position of Embotelladora Andina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Embotelladora Andina.
Diversification Opportunities for Coca Cola and Embotelladora Andina
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coca and Embotelladora is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Embotelladora Andina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embotelladora Andina 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 The Coca Cola 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 Coca Cola i.e., Coca Cola and Embotelladora Andina go up and down completely randomly.
Pair Corralation between Coca Cola and Embotelladora Andina
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Embotelladora Andina. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 2.86 times less risky than Embotelladora Andina. The stock trades about -0.32 of its potential returns per unit of risk. The Embotelladora Andina SA is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,871 in Embotelladora Andina SA on August 24, 2024 and sell it today you would lose (102.00) from holding Embotelladora Andina SA or give up 5.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Embotelladora Andina SA
Performance |
| Timeline |
| Coca Cola |
| Embotelladora Andina |
Coca Cola and Embotelladora Andina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Embotelladora Andina
The main advantage of trading using opposite Coca Cola and Embotelladora Andina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola 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.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Femsa SAB | Coca Cola vs. Vita Coco |
| Embotelladora Andina vs. Signet International Holdings | Embotelladora Andina vs. PT Astra International | Embotelladora Andina vs. Apple Rush | Embotelladora Andina vs. National Beverage Corp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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