Correlation Between SAN MIGUEL and United Breweries

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

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

Diversification Opportunities for SAN MIGUEL and United Breweries

-0.73

Correlation Coefficient

SAN MIGUEL  United Breweries

Pay attention - limited upside

The 3 months correlation between SAN and United is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding SAN MIGUEL BREWERY and United Breweries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries and SAN MIGUEL 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 SAN MIGUEL BREWERY 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 SAN MIGUEL i.e., SAN MIGUEL and United Breweries go up and down completely randomly.

Pair Corralation between SAN MIGUEL and United Breweries

Assuming the 90 days trading horizon SAN MIGUEL is expected to generate 2.19 times less return on investment than United Breweries. In addition to that, SAN MIGUEL is 2.36 times more volatile than United Breweries Co. It trades about 0.02 of its total potential returns per unit of risk. United Breweries Co is currently generating about 0.1 per unit of volatility. If you would invest  1,025  in United Breweries Co on October 26, 2024 and sell it today you would earn a total of  95.00  from holding United Breweries Co or generate 9.27% return on investment over 90 days.

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

SAN MIGUEL BREWERY  vs.  United Breweries Co

SAN MIGUEL BREWERY

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SAN MIGUEL BREWERY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, SAN MIGUEL is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

United Breweries

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Breweries Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, United Breweries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SAN MIGUEL and United Breweries

The main advantage of trading using opposite SAN MIGUEL and United Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAN MIGUEL 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 SAN MIGUEL BREWERY and United Breweries Co 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.