Correlation Between LATAM Airlines and Aguas Andinas
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By analyzing existing cross correlation between LATAM Airlines Group and Aguas Andinas SA, you can compare the effects of market volatilities on LATAM Airlines 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 LATAM Airlines with a short position of Aguas Andinas. Check out your portfolio center. Please also check ongoing floating volatility patterns of LATAM Airlines and Aguas Andinas.
Diversification Opportunities for LATAM Airlines and Aguas Andinas
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LATAM and Aguas is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding LATAM Airlines Group 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 LATAM Airlines 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 LATAM Airlines Group 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 LATAM Airlines i.e., LATAM Airlines and Aguas Andinas go up and down completely randomly.
Pair Corralation between LATAM Airlines and Aguas Andinas
Assuming the 90 days trading horizon LATAM Airlines is expected to generate 1.04 times less return on investment than Aguas Andinas. In addition to that, LATAM Airlines is 1.01 times more volatile than Aguas Andinas SA. It trades about 0.13 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 27,310 in Aguas Andinas SA on August 28, 2024 and sell it today you would earn a total of 3,146 from holding Aguas Andinas SA or generate 11.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LATAM Airlines Group vs. Aguas Andinas SA
Performance |
| Timeline |
| LATAM Airlines Group |
| Aguas Andinas SA |
LATAM Airlines and Aguas Andinas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LATAM Airlines and Aguas Andinas
The main advantage of trading using opposite LATAM Airlines and Aguas Andinas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LATAM Airlines 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.| LATAM Airlines vs. Falabella | LATAM Airlines vs. Cencosud | LATAM Airlines vs. Enjoy SA | LATAM Airlines vs. Sociedad Qumica y |
| Aguas Andinas vs. Banco de Credito | Aguas Andinas vs. LATAM Airlines Group | Aguas Andinas vs. Multiexport Foods SA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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