Correlation Between United Breweries and ALTER NRG
Can any of the company-specific risk be diversified away by investing in both United Breweries and ALTER NRG 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 ALTER NRG 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 ALTER NRG, you can compare the effects of market volatilities on United Breweries and ALTER NRG 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 ALTER NRG. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and ALTER NRG.
Diversification Opportunities for United Breweries and ALTER NRG
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and ALTER is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and ALTER NRG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTER NRG 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 ALTER NRG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALTER NRG has no effect on the direction of United Breweries i.e., United Breweries and ALTER NRG go up and down completely randomly.
Pair Corralation between United Breweries and ALTER NRG
Assuming the 90 days trading horizon United Breweries Co is expected to generate 0.6 times more return on investment than ALTER NRG. However, United Breweries Co is 1.67 times less risky than ALTER NRG. It trades about 0.49 of its potential returns per unit of risk. ALTER NRG is currently generating about -0.15 per unit of risk. If you would invest 966.00 in United Breweries Co on September 13, 2024 and sell it today you would earn a total of 124.00 from holding United Breweries Co or generate 12.84% 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. ALTER NRG
Performance |
| Timeline |
| United Breweries |
| ALTER NRG |
United Breweries and ALTER NRG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and ALTER NRG
The main advantage of trading using opposite United Breweries and ALTER NRG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, ALTER NRG 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 ALTER NRG will offset losses from the drop in ALTER NRG's long position.| United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc |
| ALTER NRG vs. INDOFOOD AGRI RES | ALTER NRG vs. NIPPON STEEL SPADR | ALTER NRG vs. MITSUBISHI STEEL MFG | ALTER NRG vs. Lifeway Foods |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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