Correlation Between Uni President and Keurig Dr

Can any of the company-specific risk be diversified away by investing in both Uni President and Keurig Dr 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 Uni President and Keurig Dr into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Uni President China Holdings and Keurig Dr Pepper, you can compare the effects of market volatilities on Uni President and Keurig Dr 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 Uni President with a short position of Keurig Dr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uni President and Keurig Dr.

Diversification Opportunities for Uni President and Keurig Dr

0.16

Correlation Coefficient

Uni President  Keurig Dr

Average diversification

The 3 months correlation between Uni and Keurig is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Uni President China Holdings and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper and Uni President 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 Uni President China Holdings are associated (or correlated) with Keurig Dr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of Uni President i.e., Uni President and Keurig Dr go up and down completely randomly.

Pair Corralation between Uni President and Keurig Dr

Assuming the 90 days horizon Uni President China Holdings is expected to generate 10.8 times more return on investment than Keurig Dr. However, Uni President is 10.8 times more volatile than Keurig Dr Pepper. It trades about 0.13 of its potential returns per unit of risk. Keurig Dr Pepper is currently generating about -0.04 per unit of risk. If you would invest  73.00  in Uni President China Holdings on September 27, 2024 and sell it today you would earn a total of  13.00  from holding Uni President China Holdings or generate 17.81% return on investment over 90 days.

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

Uni President China Holdings  vs.  Keurig Dr Pepper

Uni President China

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Uni President China Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Uni President reported solid returns over the last few months and may actually be approaching a breakup point.

Keurig Dr Pepper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keurig Dr Pepper has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Uni President and Keurig Dr

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

The idea behind Uni President China Holdings and Keurig Dr Pepper 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.