Correlation Between Philip Morris and Embotelladora Andina
Can any of the company-specific risk be diversified away by investing in both Philip Morris 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 Philip Morris and Embotelladora Andina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Philip Morris International and Embotelladora Andina SA, you can compare the effects of market volatilities on Philip Morris 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 Philip Morris with a short position of Embotelladora Andina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and Embotelladora Andina.
Diversification Opportunities for Philip Morris and Embotelladora Andina
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Philip and Embotelladora is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and Embotelladora Andina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embotelladora Andina and Philip Morris 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 Philip Morris International 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 Philip Morris i.e., Philip Morris and Embotelladora Andina go up and down completely randomly.
Pair Corralation between Philip Morris and Embotelladora Andina
Allowing for the 90-day total investment horizon Philip Morris International is expected to generate 0.56 times more return on investment than Embotelladora Andina. However, Philip Morris International is 1.77 times less risky than Embotelladora Andina. It trades about 0.17 of its potential returns per unit of risk. Embotelladora Andina SA is currently generating about -0.01 per unit of risk. If you would invest 9,704 in Philip Morris International on August 28, 2024 and sell it today you would earn a total of 3,367 from holding Philip Morris International or generate 34.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Philip Morris International vs. Embotelladora Andina SA
Performance |
| Timeline |
| Philip Morris Intern |
| Embotelladora Andina |
Philip Morris and Embotelladora Andina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philip Morris and Embotelladora Andina
The main advantage of trading using opposite Philip Morris and Embotelladora Andina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris 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.| Philip Morris vs. British American Tobacco | Philip Morris vs. Universal | Philip Morris vs. Imperial Brands PLC | Philip Morris vs. Altria Group |
| Embotelladora Andina vs. Signet International Holdings | Embotelladora Andina vs. National Beverage Corp | Embotelladora Andina vs. PT Astra International | Embotelladora Andina vs. Embotelladora Andina 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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