Correlation Between United Breweries and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both United Breweries and JAPAN TOBACCO 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 JAPAN TOBACCO 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 JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on United Breweries and JAPAN TOBACCO 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 JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and JAPAN TOBACCO.
Diversification Opportunities for United Breweries and JAPAN TOBACCO
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and JAPAN is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 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 JAPAN TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN TOBACCO UNSPADR12 has no effect on the direction of United Breweries i.e., United Breweries and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between United Breweries and JAPAN TOBACCO
Assuming the 90 days trading horizon United Breweries Co is expected to generate 1.04 times more return on investment than JAPAN TOBACCO. However, United Breweries is 1.04 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about 0.18 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about -0.11 per unit of risk. If you would invest 995.00 in United Breweries Co on October 20, 2024 and sell it today you would earn a total of 105.00 from holding United Breweries Co or generate 10.55% 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. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| United Breweries |
| JAPAN TOBACCO UNSPADR12 |
United Breweries and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and JAPAN TOBACCO
The main advantage of trading using opposite United Breweries and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, JAPAN TOBACCO 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 JAPAN TOBACCO will offset losses from the drop in JAPAN TOBACCO's long position.| United Breweries vs. ITALIAN WINE BRANDS | United Breweries vs. BioNTech SE | United Breweries vs. SAN MIGUEL BREWERY | United Breweries vs. GLG LIFE TECH |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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