Correlation Between United Breweries and Isetan Mitsukoshi

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

By analyzing existing cross correlation between United Breweries Co and Isetan Mitsukoshi Holdings, you can compare the effects of market volatilities on United Breweries and Isetan Mitsukoshi 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 Isetan Mitsukoshi. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Isetan Mitsukoshi.

Diversification Opportunities for United Breweries and Isetan Mitsukoshi

-0.48

Correlation Coefficient

United Breweries  Isetan Mitsukoshi

Very good diversification

The 3 months correlation between United and Isetan is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and Isetan Mitsukoshi Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isetan Mitsukoshi 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 Co are associated (or correlated) with Isetan Mitsukoshi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isetan Mitsukoshi has no effect on the direction of United Breweries i.e., United Breweries and Isetan Mitsukoshi go up and down completely randomly.

Pair Corralation between United Breweries and Isetan Mitsukoshi

Assuming the 90 days trading horizon United Breweries Co is expected to generate 0.63 times more return on investment than Isetan Mitsukoshi. However, United Breweries Co is 1.59 times less risky than Isetan Mitsukoshi. It trades about 0.22 of its potential returns per unit of risk. Isetan Mitsukoshi Holdings is currently generating about -0.06 per unit of risk. If you would invest  1,100  in United Breweries Co on December 20, 2024 and sell it today you would earn a total of  250.00  from holding United Breweries Co or generate 22.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

United Breweries Co  vs.  Isetan Mitsukoshi Holdings

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 17 (%) 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.

Isetan Mitsukoshi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Isetan Mitsukoshi Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with United Breweries and Isetan Mitsukoshi

The main advantage of trading using opposite United Breweries and Isetan Mitsukoshi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, Isetan Mitsukoshi 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 Isetan Mitsukoshi will offset losses from the drop in Isetan Mitsukoshi's long position.

The idea behind United Breweries Co and Isetan Mitsukoshi Holdings 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.