Correlation Between United Breweries and Seiko Epson
Can any of the company-specific risk be diversified away by investing in both United Breweries and Seiko Epson 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 Seiko Epson 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 Seiko Epson, you can compare the effects of market volatilities on United Breweries and Seiko Epson 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 Seiko Epson. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Seiko Epson.
Diversification Opportunities for United Breweries and Seiko Epson
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Seiko is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and Seiko Epson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seiko Epson 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 Seiko Epson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seiko Epson has no effect on the direction of United Breweries i.e., United Breweries and Seiko Epson go up and down completely randomly.
Pair Corralation between United Breweries and Seiko Epson
Assuming the 90 days trading horizon United Breweries Co is expected to generate 0.56 times more return on investment than Seiko Epson. However, United Breweries Co is 1.8 times less risky than Seiko Epson. It trades about 0.26 of its potential returns per unit of risk. Seiko Epson is currently generating about -0.08 per unit of risk. If you would invest 1,110 in United Breweries Co on November 27, 2024 and sell it today you would earn a total of 100.00 from holding United Breweries Co or generate 9.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. Seiko Epson
Performance |
| Timeline |
| United Breweries |
| Seiko Epson |
United Breweries and Seiko Epson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and Seiko Epson
The main advantage of trading using opposite United Breweries and Seiko Epson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, Seiko Epson 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 Seiko Epson will offset losses from the drop in Seiko Epson's long position.| United Breweries vs. CORNISH METALS INC | United Breweries vs. ADRIATIC METALS LS 013355 | United Breweries vs. Perseus Mining Limited | United Breweries vs. Tower One Wireless |
| Seiko Epson vs. CARSALESCOM | Seiko Epson vs. ZhongAn Online P | Seiko Epson vs. Perdoceo Education | Seiko Epson vs. BOS BETTER ONLINE |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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