Correlation Between United Breweries and TIANDE CHEMICAL
Can any of the company-specific risk be diversified away by investing in both United Breweries and TIANDE 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 TIANDE 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 TIANDE CHEMICAL, you can compare the effects of market volatilities on United Breweries and TIANDE 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 TIANDE CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and TIANDE CHEMICAL.
Diversification Opportunities for United Breweries and TIANDE CHEMICAL
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and TIANDE is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and TIANDE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIANDE 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 TIANDE CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIANDE CHEMICAL has no effect on the direction of United Breweries i.e., United Breweries and TIANDE CHEMICAL go up and down completely randomly.
Pair Corralation between United Breweries and TIANDE CHEMICAL
If you would invest 995.00 in United Breweries Co on September 22, 2024 and sell it today you would earn a total of 105.00 from holding United Breweries Co or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. TIANDE CHEMICAL
Performance |
| Timeline |
| United Breweries |
| TIANDE CHEMICAL |
United Breweries and TIANDE CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and TIANDE CHEMICAL
The main advantage of trading using opposite United Breweries and TIANDE CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, TIANDE 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 TIANDE CHEMICAL will offset losses from the drop in TIANDE CHEMICAL's long position.| United Breweries vs. UNITED UTILITIES GR | United Breweries vs. Selective Insurance Group | United Breweries vs. United Utilities Group | United Breweries vs. JJ SNACK FOODS |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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