Correlation Between United Breweries and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both United Breweries and MELIA HOTELS 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 MELIA HOTELS 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 MELIA HOTELS, you can compare the effects of market volatilities on United Breweries and MELIA HOTELS 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 MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and MELIA HOTELS.
Diversification Opportunities for United Breweries and MELIA HOTELS
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and MELIA is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS 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 MELIA HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MELIA HOTELS has no effect on the direction of United Breweries i.e., United Breweries and MELIA HOTELS go up and down completely randomly.
Pair Corralation between United Breweries and MELIA HOTELS
Assuming the 90 days trading horizon United Breweries Co is expected to generate 0.85 times more return on investment than MELIA HOTELS. However, United Breweries Co is 1.18 times less risky than MELIA HOTELS. It trades about 0.23 of its potential returns per unit of risk. MELIA HOTELS is currently generating about 0.06 per unit of risk. If you would invest 986.00 in United Breweries Co on September 3, 2024 and sell it today you would earn a total of 74.00 from holding United Breweries Co or generate 7.51% 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. MELIA HOTELS
Performance |
| Timeline |
| United Breweries |
| MELIA HOTELS |
United Breweries and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and MELIA HOTELS
The main advantage of trading using opposite United Breweries and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, MELIA HOTELS 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 MELIA HOTELS will offset losses from the drop in MELIA HOTELS's long position.| United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc |
| MELIA HOTELS vs. TOTAL GABON | MELIA HOTELS vs. Walgreens Boots Alliance | MELIA HOTELS vs. Peak Resources Limited |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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