Correlation Between Sandfire Resources and United Breweries
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources 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 Sandfire Resources and United Breweries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandfire Resources Limited and United Breweries Co, you can compare the effects of market volatilities on Sandfire Resources 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 Sandfire Resources with a short position of United Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and United Breweries.
Diversification Opportunities for Sandfire Resources and United Breweries
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sandfire and United is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources Limited and United Breweries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries and Sandfire Resources 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 Sandfire Resources Limited 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 Sandfire Resources i.e., Sandfire Resources and United Breweries go up and down completely randomly.
Pair Corralation between Sandfire Resources and United Breweries
Assuming the 90 days horizon Sandfire Resources Limited is expected to generate 1.07 times more return on investment than United Breweries. However, Sandfire Resources is 1.07 times more volatile than United Breweries Co. It trades about 0.22 of its potential returns per unit of risk. United Breweries Co is currently generating about 0.13 per unit of risk. If you would invest 565.00 in Sandfire Resources Limited on October 25, 2024 and sell it today you would earn a total of 40.00 from holding Sandfire Resources Limited or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Sandfire Resources Limited vs. United Breweries Co
Performance |
| Timeline |
| Sandfire Resources |
| United Breweries |
Sandfire Resources and United Breweries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and United Breweries
The main advantage of trading using opposite Sandfire Resources and United Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources 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.| Sandfire Resources vs. Reinsurance Group of | Sandfire Resources vs. NORWEGIAN AIR SHUT | Sandfire Resources vs. Insurance Australia Group | Sandfire Resources vs. Westinghouse Air Brake |
| United Breweries vs. Wizz Air Holdings | United Breweries vs. PURETECH HEALTH PLC | United Breweries vs. Pentair plc | United Breweries vs. National Health Investors |
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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