Correlation Between United Breweries and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both United Breweries and Procter Gamble 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 Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Breweries Limited and Procter Gamble Health, you can compare the effects of market volatilities on United Breweries and Procter Gamble 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 Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Procter Gamble.
Diversification Opportunities for United Breweries and Procter Gamble
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and Procter is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Limited and Procter Gamble Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble Health 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 Limited are associated (or correlated) with Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble Health has no effect on the direction of United Breweries i.e., United Breweries and Procter Gamble go up and down completely randomly.
Pair Corralation between United Breweries and Procter Gamble
Assuming the 90 days trading horizon United Breweries Limited is expected to generate 1.22 times more return on investment than Procter Gamble. However, United Breweries is 1.22 times more volatile than Procter Gamble Health. It trades about 0.06 of its potential returns per unit of risk. Procter Gamble Health is currently generating about -0.34 per unit of risk. If you would invest 198,545 in United Breweries Limited on October 12, 2024 and sell it today you would earn a total of 3,800 from holding United Breweries Limited or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
United Breweries Limited vs. Procter Gamble Health
Performance |
| Timeline |
| United Breweries |
| Procter Gamble Health |
United Breweries and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and Procter Gamble
The main advantage of trading using opposite United Breweries and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble's long position.| United Breweries vs. Sudarshan Chemical Industries | United Breweries vs. LLOYDS METALS AND | United Breweries vs. Vertoz Advertising Limited | United Breweries vs. Fertilizers and Chemicals |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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