Correlation Between Universal Entertainment and United Breweries
Can any of the company-specific risk be diversified away by investing in both Universal Entertainment 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 Universal Entertainment and United Breweries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Entertainment and United Breweries Co, you can compare the effects of market volatilities on Universal Entertainment 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 Universal Entertainment with a short position of United Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Entertainment and United Breweries.
Diversification Opportunities for Universal Entertainment and United Breweries
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and United is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Universal Entertainment and United Breweries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries and Universal Entertainment 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 Universal Entertainment 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 Universal Entertainment i.e., Universal Entertainment and United Breweries go up and down completely randomly.
Pair Corralation between Universal Entertainment and United Breweries
Assuming the 90 days trading horizon Universal Entertainment is expected to under-perform the United Breweries. In addition to that, Universal Entertainment is 2.45 times more volatile than United Breweries Co. It trades about -0.13 of its total potential returns per unit of risk. United Breweries Co is currently generating about 0.06 per unit of volatility. If you would invest 1,005 in United Breweries Co on August 29, 2024 and sell it today you would earn a total of 35.00 from holding United Breweries Co or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Entertainment vs. United Breweries Co
Performance |
| Timeline |
| Universal Entertainment |
| United Breweries |
Universal Entertainment and United Breweries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Entertainment and United Breweries
The main advantage of trading using opposite Universal Entertainment and United Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Entertainment 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.| Universal Entertainment vs. Apple Inc | Universal Entertainment vs. Apple Inc | Universal Entertainment vs. Superior Plus Corp | Universal Entertainment vs. SIVERS SEMICONDUCTORS AB |
| United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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