Correlation Between United Breweries and SIS

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

Diversification Opportunities for United Breweries and SIS

0.46

Correlation Coefficient

United Breweries  SIS

Very weak diversification

The 3 months correlation between United and SIS is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Limited and SIS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIS LIMITED 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 SIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIS LIMITED has no effect on the direction of United Breweries i.e., United Breweries and SIS go up and down completely randomly.

Pair Corralation between United Breweries and SIS

Assuming the 90 days trading horizon United Breweries Limited is expected to generate 0.77 times more return on investment than SIS. However, United Breweries Limited is 1.3 times less risky than SIS. It trades about -0.01 of its potential returns per unit of risk. SIS LIMITED is currently generating about -0.15 per unit of risk. If you would invest  199,935  in United Breweries Limited on December 21, 2024 and sell it today you would lose (3,215) from holding United Breweries Limited or give up 1.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

United Breweries Limited  vs.  SIS LIMITED

United Breweries

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Breweries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, United Breweries is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

SIS LIMITED

Risk-Adjusted Performance

Very Weak

Over the last 90 days SIS LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with United Breweries and SIS

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

The idea behind United Breweries Limited and SIS LIMITED 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.