Correlation Between Signet International and Embotelladora Andina

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

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

Diversification Opportunities for Signet International and Embotelladora Andina

0.0

Correlation Coefficient

Signet International  Embotelladora Andina

Pay attention - limited upside

The 3 months correlation between Signet and Embotelladora is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Signet International Holdings and Embotelladora Andina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embotelladora Andina and Signet International 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 Signet International Holdings 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 Signet International i.e., Signet International and Embotelladora Andina go up and down completely randomly.

Pair Corralation between Signet International and Embotelladora Andina

If you would invest  1,202  in Embotelladora Andina SA on March 4, 2024 and sell it today you would earn a total of  253.00  from holding Embotelladora Andina SA or generate 21.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Signet International Holdings  vs.  Embotelladora Andina SA

Signet International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Signet International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Signet International is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Embotelladora Andina

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Embotelladora Andina SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Embotelladora Andina sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Signet International and Embotelladora Andina

The main advantage of trading using opposite Signet International and Embotelladora Andina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Signet International 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 Signet International Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.