Correlation Between United Breweries and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both United Breweries and XLMedia PLC 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 XLMedia PLC 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 XLMedia PLC, you can compare the effects of market volatilities on United Breweries and XLMedia PLC 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 XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and XLMedia PLC.
Diversification Opportunities for United Breweries and XLMedia PLC
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and XLMedia is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of United Breweries i.e., United Breweries and XLMedia PLC go up and down completely randomly.
Pair Corralation between United Breweries and XLMedia PLC
Assuming the 90 days trading horizon United Breweries is expected to generate 2.77 times less return on investment than XLMedia PLC. But when comparing it to its historical volatility, United Breweries Co is 3.6 times less risky than XLMedia PLC. It trades about 0.24 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 9.90 in XLMedia PLC on November 3, 2024 and sell it today you would earn a total of 2.10 from holding XLMedia PLC or generate 21.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Breweries Co vs. XLMedia PLC
Performance |
| Timeline |
| United Breweries |
| XLMedia PLC |
United Breweries and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and XLMedia PLC
The main advantage of trading using opposite United Breweries and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, XLMedia PLC 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| United Breweries vs. SENECA FOODS A | United Breweries vs. Suntory Beverage Food | United Breweries vs. Molson Coors Beverage | United Breweries vs. Thai Beverage Public |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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