Correlation Between United Breweries and Salzgitter
Can any of the company-specific risk be diversified away by investing in both United Breweries and Salzgitter 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 Salzgitter 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 Salzgitter AG, you can compare the effects of market volatilities on United Breweries and Salzgitter 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 Salzgitter. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Salzgitter.
Diversification Opportunities for United Breweries and Salzgitter
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and Salzgitter is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and Salzgitter AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salzgitter AG 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 Salzgitter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salzgitter AG has no effect on the direction of United Breweries i.e., United Breweries and Salzgitter go up and down completely randomly.
Pair Corralation between United Breweries and Salzgitter
Assuming the 90 days trading horizon United Breweries Co is expected to generate 0.6 times more return on investment than Salzgitter. However, United Breweries Co is 1.68 times less risky than Salzgitter. It trades about 0.42 of its potential returns per unit of risk. Salzgitter AG is currently generating about -0.06 per unit of risk. If you would invest 986.00 in United Breweries Co on September 14, 2024 and sell it today you would earn a total of 104.00 from holding United Breweries Co or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. Salzgitter AG
Performance |
| Timeline |
| United Breweries |
| Salzgitter AG |
United Breweries and Salzgitter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and Salzgitter
The main advantage of trading using opposite United Breweries and Salzgitter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, Salzgitter 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 Salzgitter will offset losses from the drop in Salzgitter's long position.| United Breweries vs. National Retail Properties | United Breweries vs. EBRO FOODS | United Breweries vs. Cal Maine Foods | United Breweries vs. MARKET VECTR RETAIL |
| Salzgitter vs. United Breweries Co | Salzgitter vs. ScanSource | Salzgitter vs. Hitachi Construction Machinery | Salzgitter vs. AGRICULTBK HADR25 YC |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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