Correlation Between United Breweries and GREENX METALS
Can any of the company-specific risk be diversified away by investing in both United Breweries and GREENX METALS 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 United Breweries and GREENX METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Breweries Co and GREENX METALS LTD, you can compare the effects of market volatilities on United Breweries and GREENX METALS 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 United Breweries with a short position of GREENX METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and GREENX METALS.
Diversification Opportunities for United Breweries and GREENX METALS
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and GREENX is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and GREENX METALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENX METALS LTD and United Breweries 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 United Breweries Co are associated (or correlated) with GREENX METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENX METALS LTD has no effect on the direction of United Breweries i.e., United Breweries and GREENX METALS go up and down completely randomly.
Pair Corralation between United Breweries and GREENX METALS
Assuming the 90 days trading horizon United Breweries is expected to generate 1.51 times less return on investment than GREENX METALS. But when comparing it to its historical volatility, United Breweries Co is 2.4 times less risky than GREENX METALS. It trades about 0.25 of its potential returns per unit of risk. GREENX METALS LTD is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 42.00 in GREENX METALS LTD on November 3, 2024 and sell it today you would earn a total of 5.00 from holding GREENX METALS LTD or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. GREENX METALS LTD
Performance |
| Timeline |
| United Breweries |
| GREENX METALS LTD |
United Breweries and GREENX METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and GREENX METALS
The main advantage of trading using opposite United Breweries and GREENX METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, GREENX METALS 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 GREENX METALS will offset losses from the drop in GREENX METALS's long position.| United Breweries vs. GEAR4MUSIC LS 10 | United Breweries vs. Air Transport Services | United Breweries vs. USWE SPORTS AB | United Breweries vs. BII Railway Transportation |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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