Correlation Between United Breweries and Sumitomo Chemical
Can any of the company-specific risk be diversified away by investing in both United Breweries and Sumitomo Chemical 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 Sumitomo Chemical 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 Sumitomo Chemical, you can compare the effects of market volatilities on United Breweries and Sumitomo Chemical 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 Sumitomo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Sumitomo Chemical.
Diversification Opportunities for United Breweries and Sumitomo Chemical
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Sumitomo is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and Sumitomo Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical 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 Sumitomo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Chemical has no effect on the direction of United Breweries i.e., United Breweries and Sumitomo Chemical go up and down completely randomly.
Pair Corralation between United Breweries and Sumitomo Chemical
Assuming the 90 days trading horizon United Breweries Co is expected to generate 1.32 times more return on investment than Sumitomo Chemical. However, United Breweries is 1.32 times more volatile than Sumitomo Chemical. It trades about 0.01 of its potential returns per unit of risk. Sumitomo Chemical is currently generating about -0.02 per unit of risk. If you would invest 1,090 in United Breweries Co on October 24, 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. Sumitomo Chemical
Performance |
| Timeline |
| United Breweries |
| Sumitomo Chemical |
United Breweries and Sumitomo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and Sumitomo Chemical
The main advantage of trading using opposite United Breweries and Sumitomo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, Sumitomo Chemical 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 Sumitomo Chemical will offset losses from the drop in Sumitomo Chemical's long position.| United Breweries vs. Tyson Foods | United Breweries vs. Gol Intelligent Airlines | United Breweries vs. United Airlines Holdings | United Breweries vs. Aegean Airlines SA |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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