Correlation Between United Breweries and Collins Foods
Can any of the company-specific risk be diversified away by investing in both United Breweries and Collins Foods 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 Collins Foods 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 Collins Foods Limited, you can compare the effects of market volatilities on United Breweries and Collins Foods 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 Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Collins Foods.
Diversification Opportunities for United Breweries and Collins Foods
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Collins is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and Collins Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods Limited 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 Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods Limited has no effect on the direction of United Breweries i.e., United Breweries and Collins Foods go up and down completely randomly.
Pair Corralation between United Breweries and Collins Foods
Assuming the 90 days trading horizon United Breweries Co is expected to generate 0.92 times more return on investment than Collins Foods. However, United Breweries Co is 1.09 times less risky than Collins Foods. It trades about 0.17 of its potential returns per unit of risk. Collins Foods Limited is currently generating about -0.06 per unit of risk. If you would invest 976.00 in United Breweries Co on September 13, 2024 and sell it today you would earn a total of 114.00 from holding United Breweries Co or generate 11.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. Collins Foods Limited
Performance |
| Timeline |
| United Breweries |
| Collins Foods Limited |
United Breweries and Collins Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and Collins Foods
The main advantage of trading using opposite United Breweries and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, Collins Foods 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 Collins Foods will offset losses from the drop in Collins Foods' long position.| United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc |
| Collins Foods vs. Starbucks | Collins Foods vs. Superior Plus Corp | Collins Foods vs. SIVERS SEMICONDUCTORS AB | Collins Foods vs. NorAm Drilling AS |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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