Correlation Between INTERNATIONAL BREWERIES and UNION HOMES

Can any of the company-specific risk be diversified away by investing in both INTERNATIONAL BREWERIES and UNION HOMES 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 UNION HOMES 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 UNION HOMES REAL, you can compare the effects of market volatilities on INTERNATIONAL BREWERIES and UNION HOMES 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 UNION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERNATIONAL BREWERIES and UNION HOMES.

Diversification Opportunities for INTERNATIONAL BREWERIES and UNION HOMES

-0.4

Correlation Coefficient

INTERNATIONAL BREWERIES  UNION HOMES

Very good diversification

The 3 months correlation between INTERNATIONAL and UNION is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding INTERNATIONAL BREWERIES PLC and UNION HOMES REAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNION HOMES REAL 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 UNION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNION HOMES REAL has no effect on the direction of INTERNATIONAL BREWERIES i.e., INTERNATIONAL BREWERIES and UNION HOMES go up and down completely randomly.

Pair Corralation between INTERNATIONAL BREWERIES and UNION HOMES

Assuming the 90 days trading horizon INTERNATIONAL BREWERIES PLC is expected to under-perform the UNION HOMES. But the stock apears to be less risky and, when comparing its historical volatility, INTERNATIONAL BREWERIES PLC is 1.07 times less risky than UNION HOMES. The stock trades about -0.04 of its potential returns per unit of risk. The UNION HOMES REAL is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,660  in UNION HOMES REAL on December 29, 2024 and sell it today you would earn a total of  1,465  from holding UNION HOMES REAL or generate 40.03% return on investment over 90 days.

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

INTERNATIONAL BREWERIES PLC  vs.  UNION HOMES REAL

INTERNATIONAL BREWERIES

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTERNATIONAL BREWERIES PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, INTERNATIONAL BREWERIES is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

UNION HOMES REAL

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UNION HOMES REAL are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, UNION HOMES demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTERNATIONAL BREWERIES and UNION HOMES

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

The idea behind INTERNATIONAL BREWERIES PLC and UNION HOMES REAL 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.