Correlation Between State Bank and United Breweries
Can any of the company-specific risk be diversified away by investing in both State Bank 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 State Bank and United Breweries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Bank of and United Breweries Limited, you can compare the effects of market volatilities on State Bank 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 State Bank with a short position of United Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and United Breweries.
Diversification Opportunities for State Bank and United Breweries
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and United is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and United Breweries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries and State Bank 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 State Bank of 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 State Bank i.e., State Bank and United Breweries go up and down completely randomly.
Pair Corralation between State Bank and United Breweries
Assuming the 90 days trading horizon State Bank of is expected to under-perform the United Breweries. But the stock apears to be less risky and, when comparing its historical volatility, State Bank of is 1.05 times less risky than United Breweries. The stock trades about -0.05 of its potential returns per unit of risk. The United Breweries Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 208,259 in United Breweries Limited on October 13, 2024 and sell it today you would lose (5,309) from holding United Breweries Limited or give up 2.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. United Breweries Limited
Performance |
| Timeline |
| State Bank |
| United Breweries |
State Bank and United Breweries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and United Breweries
The main advantage of trading using opposite State Bank and United Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank 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.| State Bank vs. Foods Inns Limited | State Bank vs. Sonata Software Limited | State Bank vs. Uniinfo Telecom Services | State Bank vs. One 97 Communications |
| United Breweries vs. Life Insurance | United Breweries vs. Power Finance | United Breweries vs. HDFC Bank Limited | United Breweries vs. State Bank of |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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