Correlation Between Datamatics Global and United Breweries

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

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

Diversification Opportunities for Datamatics Global and United Breweries

0.88

Correlation Coefficient

Datamatics Global  United Breweries

Very poor diversification

The 3 months correlation between Datamatics and United is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Datamatics Global Services and United Breweries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries and Datamatics Global 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 Datamatics Global Services 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 Datamatics Global i.e., Datamatics Global and United Breweries go up and down completely randomly.

Pair Corralation between Datamatics Global and United Breweries

Assuming the 90 days trading horizon Datamatics Global Services is expected to generate 1.57 times more return on investment than United Breweries. However, Datamatics Global is 1.57 times more volatile than United Breweries Limited. It trades about 0.13 of its potential returns per unit of risk. United Breweries Limited is currently generating about 0.05 per unit of risk. If you would invest  55,545  in Datamatics Global Services on October 25, 2024 and sell it today you would earn a total of  11,430  from holding Datamatics Global Services or generate 20.58% return on investment over 90 days.

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

Datamatics Global Services  vs.  United Breweries Limited

Datamatics Global

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Datamatics Global Services are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Datamatics Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

United Breweries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United Breweries Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, United Breweries is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Datamatics Global and United Breweries

The main advantage of trading using opposite Datamatics Global and United Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datamatics Global 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 Datamatics Global Services and United Breweries Limited 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.