Correlation Between United Breweries and CHINA EAST
Can any of the company-specific risk be diversified away by investing in both United Breweries and CHINA EAST 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 CHINA EAST 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 CHINA EAST ED, you can compare the effects of market volatilities on United Breweries and CHINA EAST 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 CHINA EAST. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and CHINA EAST.
Diversification Opportunities for United Breweries and CHINA EAST
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and CHINA is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and CHINA EAST ED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EAST ED 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 CHINA EAST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EAST ED has no effect on the direction of United Breweries i.e., United Breweries and CHINA EAST go up and down completely randomly.
Pair Corralation between United Breweries and CHINA EAST
Assuming the 90 days trading horizon United Breweries Co is expected to generate 0.56 times more return on investment than CHINA EAST. However, United Breweries Co is 1.79 times less risky than CHINA EAST. It trades about 0.04 of its potential returns per unit of risk. CHINA EAST ED is currently generating about 0.02 per unit of risk. If you would invest 1,008 in United Breweries Co on November 6, 2024 and sell it today you would earn a total of 122.00 from holding United Breweries Co or generate 12.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. CHINA EAST ED
Performance |
| Timeline |
| United Breweries |
| CHINA EAST ED |
United Breweries and CHINA EAST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and CHINA EAST
The main advantage of trading using opposite United Breweries and CHINA EAST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, CHINA EAST 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 CHINA EAST will offset losses from the drop in CHINA EAST'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 |
| CHINA EAST vs. IDP EDUCATION LTD | CHINA EAST vs. TAL Education Group | CHINA EAST vs. Strategic Education | CHINA EAST vs. Chegg Inc |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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