Correlation Between United Breweries and TIMES CHINA
Can any of the company-specific risk be diversified away by investing in both United Breweries and TIMES CHINA 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 TIMES CHINA 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 TIMES CHINA HLDGS, you can compare the effects of market volatilities on United Breweries and TIMES CHINA 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 TIMES CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and TIMES CHINA.
Diversification Opportunities for United Breweries and TIMES CHINA
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and TIMES is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and TIMES CHINA HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIMES CHINA HLDGS 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 TIMES CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIMES CHINA HLDGS has no effect on the direction of United Breweries i.e., United Breweries and TIMES CHINA go up and down completely randomly.
Pair Corralation between United Breweries and TIMES CHINA
Assuming the 90 days trading horizon United Breweries Co is expected to generate 0.25 times more return on investment than TIMES CHINA. However, United Breweries Co is 3.98 times less risky than TIMES CHINA. It trades about 0.25 of its potential returns per unit of risk. TIMES CHINA HLDGS is currently generating about -0.02 per unit of risk. If you would invest 1,060 in United Breweries Co on November 3, 2024 and sell it today you would earn a total of 90.00 from holding United Breweries Co or generate 8.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. TIMES CHINA HLDGS
Performance |
| Timeline |
| United Breweries |
| TIMES CHINA HLDGS |
United Breweries and TIMES CHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and TIMES CHINA
The main advantage of trading using opposite United Breweries and TIMES CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, TIMES CHINA 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 TIMES CHINA will offset losses from the drop in TIMES CHINA's long position.| United Breweries vs. GEAR4MUSIC LS 10 | United Breweries vs. Air Transport Services | United Breweries vs. USWE SPORTS AB | United Breweries vs. BII Railway Transportation |
| TIMES CHINA vs. PATTIES FOODS | TIMES CHINA vs. BW OFFSHORE LTD | TIMES CHINA vs. INTER CARS SA | TIMES CHINA vs. CN MODERN DAIRY |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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