Correlation Between United Breweries and Telecom Argentina
Can any of the company-specific risk be diversified away by investing in both United Breweries and Telecom Argentina 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 Telecom Argentina 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 Telecom Argentina SA, you can compare the effects of market volatilities on United Breweries and Telecom Argentina 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 Telecom Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Telecom Argentina.
Diversification Opportunities for United Breweries and Telecom Argentina
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Telecom is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and Telecom Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina 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 Telecom Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Argentina has no effect on the direction of United Breweries i.e., United Breweries and Telecom Argentina go up and down completely randomly.
Pair Corralation between United Breweries and Telecom Argentina
Assuming the 90 days trading horizon United Breweries Co is expected to generate 0.47 times more return on investment than Telecom Argentina. However, United Breweries Co is 2.13 times less risky than Telecom Argentina. It trades about 0.23 of its potential returns per unit of risk. Telecom Argentina SA is currently generating about -0.17 per unit of risk. If you would invest 1,050 in United Breweries Co on November 5, 2024 and sell it today you would earn a total of 80.00 from holding United Breweries Co or generate 7.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. Telecom Argentina SA
Performance |
| Timeline |
| United Breweries |
| Telecom Argentina |
United Breweries and Telecom Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and Telecom Argentina
The main advantage of trading using opposite United Breweries and Telecom Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, Telecom Argentina 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 Telecom Argentina will offset losses from the drop in Telecom Argentina's long position.| United Breweries vs. REINET INVESTMENTS SCA | United Breweries vs. ECHO INVESTMENT ZY | United Breweries vs. Universal Insurance Holdings | United Breweries vs. Direct Line Insurance |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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