Correlation Between INTERNATIONAL BREWERIES and SECURE ELECTRONIC

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

By analyzing existing cross correlation between INTERNATIONAL BREWERIES PLC and SECURE ELECTRONIC TECHNOLOGY, you can compare the effects of market volatilities on INTERNATIONAL BREWERIES and SECURE ELECTRONIC 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 INTERNATIONAL BREWERIES with a short position of SECURE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERNATIONAL BREWERIES and SECURE ELECTRONIC.

Diversification Opportunities for INTERNATIONAL BREWERIES and SECURE ELECTRONIC

0.29

Correlation Coefficient

INTERNATIONAL BREWERIES  SECURE ELECTRONIC

Modest diversification

The 3 months correlation between INTERNATIONAL and SECURE is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding INTERNATIONAL BREWERIES PLC and SECURE ELECTRONIC TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECURE ELECTRONIC and INTERNATIONAL 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 INTERNATIONAL BREWERIES PLC are associated (or correlated) with SECURE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECURE ELECTRONIC has no effect on the direction of INTERNATIONAL BREWERIES i.e., INTERNATIONAL BREWERIES and SECURE ELECTRONIC go up and down completely randomly.

Pair Corralation between INTERNATIONAL BREWERIES and SECURE ELECTRONIC

Assuming the 90 days trading horizon INTERNATIONAL BREWERIES PLC is expected to generate 0.58 times more return on investment than SECURE ELECTRONIC. However, INTERNATIONAL BREWERIES PLC is 1.73 times less risky than SECURE ELECTRONIC. It trades about 0.53 of its potential returns per unit of risk. SECURE ELECTRONIC TECHNOLOGY is currently generating about 0.16 per unit of risk. If you would invest  400.00  in INTERNATIONAL BREWERIES PLC on October 6, 2024 and sell it today you would earn a total of  160.00  from holding INTERNATIONAL BREWERIES PLC or generate 40.0% return on investment over 90 days.

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

INTERNATIONAL BREWERIES PLC  vs.  SECURE ELECTRONIC TECHNOLOGY

INTERNATIONAL BREWERIES

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INTERNATIONAL BREWERIES PLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, INTERNATIONAL BREWERIES showed solid returns over the last few months and may actually be approaching a breakup point.

SECURE ELECTRONIC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SECURE ELECTRONIC TECHNOLOGY are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, SECURE ELECTRONIC demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTERNATIONAL BREWERIES and SECURE ELECTRONIC

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

The idea behind INTERNATIONAL BREWERIES PLC and SECURE ELECTRONIC TECHNOLOGY 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.