Correlation Between United Breweries and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both United Breweries and STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS, you can compare the effects of market volatilities on United Breweries and STMICROELECTRONICS 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 STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and STMICROELECTRONICS.
Diversification Opportunities for United Breweries and STMICROELECTRONICS
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and STMICROELECTRONICS is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS 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 STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of United Breweries i.e., United Breweries and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between United Breweries and STMICROELECTRONICS
Assuming the 90 days trading horizon United Breweries Co is expected to generate 0.84 times more return on investment than STMICROELECTRONICS. However, United Breweries Co is 1.19 times less risky than STMICROELECTRONICS. It trades about -0.01 of its potential returns per unit of risk. STMICROELECTRONICS is currently generating about -0.02 per unit of risk. If you would invest 1,248 in United Breweries Co on October 11, 2024 and sell it today you would lose (158.00) from holding United Breweries Co or give up 12.66% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
United Breweries Co vs. STMICROELECTRONICS
Performance |
Timeline |
United Breweries |
STMICROELECTRONICS |
United Breweries and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Breweries and STMICROELECTRONICS
The main advantage of trading using opposite United Breweries and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, STMICROELECTRONICS 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 STMICROELECTRONICS will offset losses from the drop in STMICROELECTRONICS's long position.United Breweries vs. Thai Beverage Public | United Breweries vs. GEELY AUTOMOBILE | United Breweries vs. Geely Automobile Holdings | United Breweries vs. Spirent Communications plc |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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