Correlation Between Ganesh Housing and United Breweries

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

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

Diversification Opportunities for Ganesh Housing and United Breweries

-0.17

Correlation Coefficient

Ganesh Housing  United Breweries

Good diversification

The 3 months correlation between Ganesh and United is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ganesh Housing and United Breweries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries and Ganesh Housing 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 Ganesh Housing 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 Ganesh Housing i.e., Ganesh Housing and United Breweries go up and down completely randomly.

Pair Corralation between Ganesh Housing and United Breweries

Assuming the 90 days trading horizon Ganesh Housing is expected to generate 2.19 times more return on investment than United Breweries. However, Ganesh Housing is 2.19 times more volatile than United Breweries Limited. It trades about 0.1 of its potential returns per unit of risk. United Breweries Limited is currently generating about 0.04 per unit of risk. If you would invest  36,221  in Ganesh Housing on October 11, 2024 and sell it today you would earn a total of  96,644  from holding Ganesh Housing or generate 266.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.18%
Values	Daily Returns

Ganesh Housing  vs.  United Breweries Limited

Ganesh Housing

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ganesh Housing are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Ganesh Housing demonstrated solid returns over the last few months and may actually be approaching a breakup point.

United Breweries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Breweries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, United Breweries is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ganesh Housing and United Breweries

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

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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 Transaction History module to view history of all your transactions and understand their impact on performance.