Correlation Between NTG Nordic and United Breweries
Can any of the company-specific risk be diversified away by investing in both NTG Nordic 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 NTG Nordic and United Breweries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NTG Nordic Transport and United Breweries Co, you can compare the effects of market volatilities on NTG Nordic 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 NTG Nordic with a short position of United Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and United Breweries.
Diversification Opportunities for NTG Nordic and United Breweries
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NTG and United is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and United Breweries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries and NTG Nordic 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 NTG Nordic Transport 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 NTG Nordic i.e., NTG Nordic and United Breweries go up and down completely randomly.
Pair Corralation between NTG Nordic and United Breweries
Assuming the 90 days trading horizon NTG Nordic Transport is expected to under-perform the United Breweries. But the stock apears to be less risky and, when comparing its historical volatility, NTG Nordic Transport is 1.41 times less risky than United Breweries. The stock trades about -0.6 of its potential returns per unit of risk. The United Breweries Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,030 in United Breweries Co on September 24, 2024 and sell it today you would earn a total of 70.00 from holding United Breweries Co or generate 6.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NTG Nordic Transport vs. United Breweries Co
Performance |
Timeline |
NTG Nordic Transport |
United Breweries |
NTG Nordic and United Breweries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NTG Nordic and United Breweries
The main advantage of trading using opposite NTG Nordic and United Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic 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.NTG Nordic vs. MITSUBISHI STEEL MFG | NTG Nordic vs. ABO GROUP ENVIRONMENT | NTG Nordic vs. Khiron Life Sciences | NTG Nordic vs. United States Steel |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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