Correlation Between Multiexport Foods and Compania General
Can any of the company-specific risk be diversified away by investing in both Multiexport Foods and Compania General 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 Multiexport Foods and Compania General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multiexport Foods SA and Compania General de, you can compare the effects of market volatilities on Multiexport Foods and Compania General 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 Multiexport Foods with a short position of Compania General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multiexport Foods and Compania General.
Diversification Opportunities for Multiexport Foods and Compania General
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Multiexport and Compania is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Multiexport Foods SA and Compania General de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania General and Multiexport Foods 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 Multiexport Foods SA are associated (or correlated) with Compania General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania General has no effect on the direction of Multiexport Foods i.e., Multiexport Foods and Compania General go up and down completely randomly.
Pair Corralation between Multiexport Foods and Compania General
Assuming the 90 days trading horizon Multiexport Foods SA is expected to under-perform the Compania General. But the stock apears to be less risky and, when comparing its historical volatility, Multiexport Foods SA is 2.55 times less risky than Compania General. The stock trades about -0.06 of its potential returns per unit of risk. The Compania General de is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 20,896 in Compania General de on August 29, 2024 and sell it today you would earn a total of 9,990 from holding Compania General de or generate 47.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.72% |
| Values | Daily Returns |
Multiexport Foods SA vs. Compania General de
Performance |
| Timeline |
| Multiexport Foods |
| Compania General |
Multiexport Foods and Compania General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multiexport Foods and Compania General
The main advantage of trading using opposite Multiexport Foods and Compania General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multiexport Foods position performs unexpectedly, Compania General 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 Compania General will offset losses from the drop in Compania General's long position.| Multiexport Foods vs. Embotelladora Andina SA | Multiexport Foods vs. Administradora Americana de | Multiexport Foods vs. Las Condes | Multiexport Foods vs. Energia Latina SA |
| Compania General vs. Compania Cervecerias Unidas | Compania General vs. Aguas Andinas SA | Compania General vs. Parq Arauco | Compania General vs. Enel Generacin Chile |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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