Correlation Between Public Service and United Breweries
Can any of the company-specific risk be diversified away by investing in both Public Service and United Breweries 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 Public Service and United Breweries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Service Enterprise and United Breweries Co, you can compare the effects of market volatilities on Public Service and United Breweries 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 Public Service with a short position of United Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Service and United Breweries.
Diversification Opportunities for Public Service and United Breweries
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Public and United is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Public Service Enterprise and United Breweries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries and Public Service 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 Public Service Enterprise are associated (or correlated) with United Breweries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Breweries has no effect on the direction of Public Service i.e., Public Service and United Breweries go up and down completely randomly.
Pair Corralation between Public Service and United Breweries
Assuming the 90 days horizon Public Service Enterprise is expected to generate 1.43 times more return on investment than United Breweries. However, Public Service is 1.43 times more volatile than United Breweries Co. It trades about 0.03 of its potential returns per unit of risk. United Breweries Co is currently generating about 0.01 per unit of risk. If you would invest 1,010 in Public Service Enterprise on September 4, 2024 and sell it today you would earn a total of 250.00 from holding Public Service Enterprise or generate 24.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Public Service Enterprise vs. United Breweries Co
Performance |
| Timeline |
| Public Service Enterprise |
| United Breweries |
Public Service and United Breweries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Service and United Breweries
The main advantage of trading using opposite Public Service and United Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Service position performs unexpectedly, United Breweries 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 United Breweries will offset losses from the drop in United Breweries' long position.| Public Service vs. Autohome ADR | Public Service vs. CENTURIA OFFICE REIT | Public Service vs. ADRIATIC METALS LS 013355 | Public Service vs. Beazer Homes USA |
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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 Stocks Directory module to find actively traded stocks across global markets.
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