Correlation Between Las Condes and Multiexport Foods

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

Diversification Opportunities for Las Condes and Multiexport Foods

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Las and Multiexport is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Las Condes and Multiexport Foods SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multiexport Foods and Las Condes 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 Las Condes are associated (or correlated) with Multiexport Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multiexport Foods has no effect on the direction of Las Condes i.e., Las Condes and Multiexport Foods go up and down completely randomly.

Pair Corralation between Las Condes and Multiexport Foods

Assuming the 90 days trading horizon Las Condes is expected to under-perform the Multiexport Foods. In addition to that, Las Condes is 2.36 times more volatile than Multiexport Foods SA. It trades about -0.02 of its total potential returns per unit of risk. Multiexport Foods SA is currently generating about -0.05 per unit of volatility. If you would invest  24,314  in Multiexport Foods SA on August 27, 2024 and sell it today you would lose (3,826) from holding Multiexport Foods SA or give up 15.74% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy79.89%
ValuesDaily Returns

Las Condes  vs.  Multiexport Foods SA

 Performance 
       Timeline  
Las Condes 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Las Condes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
Multiexport Foods 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Multiexport Foods SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Multiexport Foods may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Las Condes and Multiexport Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Las Condes and Multiexport Foods

The main advantage of trading using opposite Las Condes and Multiexport Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Las Condes position performs unexpectedly, Multiexport Foods 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 Multiexport Foods will offset losses from the drop in Multiexport Foods' long position.
The idea behind Las Condes and Multiexport Foods 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.
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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