Correlation Between Keurig Dr and Embotelladora Andina

Can any of the company-specific risk be diversified away by investing in both Keurig Dr 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 Keurig Dr and Embotelladora Andina into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Keurig Dr Pepper and Embotelladora Andina SA, you can compare the effects of market volatilities on Keurig Dr 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 Keurig Dr with a short position of Embotelladora Andina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keurig Dr and Embotelladora Andina.

Diversification Opportunities for Keurig Dr and Embotelladora Andina

0.47

Correlation Coefficient

Keurig Dr  Embotelladora Andina

Very weak diversification

The 3 months correlation between Keurig and Embotelladora is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and Embotelladora Andina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embotelladora Andina and Keurig Dr 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 Keurig Dr Pepper 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 Keurig Dr i.e., Keurig Dr and Embotelladora Andina go up and down completely randomly.

Pair Corralation between Keurig Dr and Embotelladora Andina

Considering the 90-day investment horizon Keurig Dr Pepper is expected to under-perform the Embotelladora Andina. But the stock apears to be less risky and, when comparing its historical volatility, Keurig Dr Pepper is 2.03 times less risky than Embotelladora Andina. The stock trades about -0.07 of its potential returns per unit of risk. The Embotelladora Andina SA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,867  in Embotelladora Andina SA on August 10, 2024 and sell it today you would lose (72.00) from holding Embotelladora Andina SA or give up 3.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Keurig Dr Pepper  vs.  Embotelladora Andina SA

Keurig Dr Pepper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keurig Dr Pepper has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Keurig Dr is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Embotelladora Andina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embotelladora Andina SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Embotelladora Andina is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Keurig Dr and Embotelladora Andina

The main advantage of trading using opposite Keurig Dr and Embotelladora Andina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keurig Dr 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.

The idea behind Keurig Dr Pepper and Embotelladora Andina 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.