Correlation Between United Breweries and Brockhaus Capital

Can any of the company-specific risk be diversified away by investing in both United Breweries and Brockhaus Capital 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 Brockhaus Capital 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 Brockhaus Capital Management, you can compare the effects of market volatilities on United Breweries and Brockhaus Capital 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 Brockhaus Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Brockhaus Capital.

Diversification Opportunities for United Breweries and Brockhaus Capital

-0.63

Correlation Coefficient

United Breweries  Brockhaus Capital

Excellent diversification

The 3 months correlation between United and Brockhaus is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and Brockhaus Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brockhaus Capital 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 Brockhaus Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brockhaus Capital has no effect on the direction of United Breweries i.e., United Breweries and Brockhaus Capital go up and down completely randomly.

Pair Corralation between United Breweries and Brockhaus Capital

Assuming the 90 days trading horizon United Breweries Co is expected to generate 0.71 times more return on investment than Brockhaus Capital. However, United Breweries Co is 1.4 times less risky than Brockhaus Capital. It trades about 0.16 of its potential returns per unit of risk. Brockhaus Capital Management is currently generating about -0.06 per unit of risk. If you would invest  917.00  in United Breweries Co on September 25, 2024 and sell it today you would earn a total of  173.00  from holding United Breweries Co or generate 18.87% return on investment over 90 days.

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

United Breweries Co  vs.  Brockhaus Capital Management

United Breweries

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Breweries Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, United Breweries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Brockhaus Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical 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 Brockhaus Capital

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

The idea behind United Breweries Co and Brockhaus Capital Management 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.