Correlation Between United Breweries and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both United Breweries and Kaiser Aluminum 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 Kaiser Aluminum 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 Kaiser Aluminum, you can compare the effects of market volatilities on United Breweries and Kaiser Aluminum 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 Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Kaiser Aluminum.
Diversification Opportunities for United Breweries and Kaiser Aluminum
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Kaiser is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of United Breweries i.e., United Breweries and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between United Breweries and Kaiser Aluminum
Assuming the 90 days trading horizon United Breweries Co is expected to generate 0.77 times more return on investment than Kaiser Aluminum. However, United Breweries Co is 1.29 times less risky than Kaiser Aluminum. It trades about 0.35 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.04 per unit of risk. If you would invest 1,110 in United Breweries Co on November 29, 2024 and sell it today you would earn a total of 150.00 from holding United Breweries Co or generate 13.51% 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. Kaiser Aluminum
Performance |
| Timeline |
| United Breweries |
| Kaiser Aluminum |
United Breweries and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and Kaiser Aluminum
The main advantage of trading using opposite United Breweries and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.| United Breweries vs. WT OFFSHORE | United Breweries vs. INTERSHOP Communications Aktiengesellschaft | United Breweries vs. HEMISPHERE EGY | United Breweries vs. Iridium Communications |
| Kaiser Aluminum vs. BOVIS HOMES GROUP | Kaiser Aluminum vs. Focus Home Interactive | Kaiser Aluminum vs. KIMBALL ELECTRONICS | Kaiser Aluminum vs. Addus HomeCare |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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