Correlation Between United Breweries and NEXANS ADR
Can any of the company-specific risk be diversified away by investing in both United Breweries and NEXANS ADR 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 NEXANS ADR 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 NEXANS ADR EO, you can compare the effects of market volatilities on United Breweries and NEXANS ADR 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 NEXANS ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and NEXANS ADR.
Diversification Opportunities for United Breweries and NEXANS ADR
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and NEXANS is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and NEXANS ADR EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXANS ADR EO 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 NEXANS ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXANS ADR EO has no effect on the direction of United Breweries i.e., United Breweries and NEXANS ADR go up and down completely randomly.
Pair Corralation between United Breweries and NEXANS ADR
Assuming the 90 days trading horizon United Breweries Co is expected to generate 0.52 times more return on investment than NEXANS ADR. However, United Breweries Co is 1.92 times less risky than NEXANS ADR. It trades about 0.01 of its potential returns per unit of risk. NEXANS ADR EO is currently generating about -0.13 per unit of risk. If you would invest 1,090 in United Breweries Co on October 23, 2024 and sell it today you would earn a total of 0.00 from holding United Breweries Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. NEXANS ADR EO
Performance |
| Timeline |
| United Breweries |
| NEXANS ADR EO |
United Breweries and NEXANS ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and NEXANS ADR
The main advantage of trading using opposite United Breweries and NEXANS ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, NEXANS ADR 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 NEXANS ADR will offset losses from the drop in NEXANS ADR's long position.| United Breweries vs. Treasury Wine Estates | United Breweries vs. Corsair Gaming | United Breweries vs. NEW MILLENNIUM IRON | United Breweries vs. Tianjin Capital Environmental |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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