Correlation Between Embotelladora Andina and Jones Soda

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

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

Diversification Opportunities for Embotelladora Andina and Jones Soda

0.0

Correlation Coefficient

Embotelladora Andina  Jones Soda

Pay attention - limited upside

The 3 months correlation between Embotelladora and Jones is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Embotelladora Andina SA and Jones Soda Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jones Soda and Embotelladora Andina 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 Embotelladora Andina SA are associated (or correlated) with Jones Soda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jones Soda has no effect on the direction of Embotelladora Andina i.e., Embotelladora Andina and Jones Soda go up and down completely randomly.

Pair Corralation between Embotelladora Andina and Jones Soda

If you would invest  1,361  in Embotelladora Andina SA on February 20, 2025 and sell it today you would earn a total of  1,330  from holding Embotelladora Andina SA or generate 97.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Embotelladora Andina SA  vs.  Jones Soda Co

Embotelladora Andina

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embotelladora Andina SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Embotelladora Andina sustained solid returns over the last few months and may actually be approaching a breakup point.

Jones Soda

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Embotelladora Andina and Jones Soda

The main advantage of trading using opposite Embotelladora Andina and Jones Soda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embotelladora Andina position performs unexpectedly, Jones Soda 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 Jones Soda will offset losses from the drop in Jones Soda's long position.

The idea behind Embotelladora Andina SA and Jones Soda Co 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.