Correlation Between United Breweries and G Tec

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

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

Diversification Opportunities for United Breweries and G Tec

-0.03

Correlation Coefficient

United Breweries  G Tec

Good diversification

The 3 months correlation between United and GTECJAINX is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Limited and G Tec Jainx Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Tec Jainx and United 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 United Breweries Limited are associated (or correlated) with G Tec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Tec Jainx has no effect on the direction of United Breweries i.e., United Breweries and G Tec go up and down completely randomly.

Pair Corralation between United Breweries and G Tec

Assuming the 90 days trading horizon United Breweries Limited is expected to generate 0.44 times more return on investment than G Tec. However, United Breweries Limited is 2.29 times less risky than G Tec. It trades about 0.01 of its potential returns per unit of risk. G Tec Jainx Education is currently generating about -0.1 per unit of risk. If you would invest  193,805  in United Breweries Limited on October 22, 2024 and sell it today you would earn a total of  1,325  from holding United Breweries Limited or generate 0.68% return on investment over 90 days.

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

United Breweries Limited  vs.  G Tec Jainx Education

United Breweries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United Breweries Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

G Tec Jainx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G Tec Jainx Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with United Breweries and G Tec

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

The idea behind United Breweries Limited and G Tec Jainx Education 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.