Correlation Between KOOL2PLAY and United Breweries

Can any of the company-specific risk be diversified away by investing in both KOOL2PLAY 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 KOOL2PLAY and United Breweries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KOOL2PLAY SA ZY and United Breweries Co, you can compare the effects of market volatilities on KOOL2PLAY 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 KOOL2PLAY with a short position of United Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of KOOL2PLAY and United Breweries.

Diversification Opportunities for KOOL2PLAY and United Breweries

0.77

Correlation Coefficient

KOOL2PLAY  United Breweries

Poor diversification

The 3 months correlation between KOOL2PLAY and United is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding KOOL2PLAY SA ZY and United Breweries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries and KOOL2PLAY 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 KOOL2PLAY SA ZY 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 KOOL2PLAY i.e., KOOL2PLAY and United Breweries go up and down completely randomly.

Pair Corralation between KOOL2PLAY and United Breweries

Assuming the 90 days horizon KOOL2PLAY SA ZY is expected to generate 4.27 times more return on investment than United Breweries. However, KOOL2PLAY is 4.27 times more volatile than United Breweries Co. It trades about 0.1 of its potential returns per unit of risk. United Breweries Co is currently generating about 0.25 per unit of risk. If you would invest  16.00  in KOOL2PLAY SA ZY on December 24, 2024 and sell it today you would earn a total of  5.00  from holding KOOL2PLAY SA ZY or generate 31.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

KOOL2PLAY SA ZY  vs.  United Breweries Co

KOOL2PLAY SA ZY

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KOOL2PLAY SA ZY are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KOOL2PLAY reported solid returns over the last few months and may actually be approaching a breakup point.

United Breweries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Breweries Co are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, United Breweries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KOOL2PLAY and United Breweries

The main advantage of trading using opposite KOOL2PLAY and United Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KOOL2PLAY 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.

The idea behind KOOL2PLAY SA ZY and United Breweries Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .