Correlation Between Aboitiz Equity and San Miguel

Can any of the company-specific risk be diversified away by investing in both Aboitiz Equity and San Miguel 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 Aboitiz Equity and San Miguel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aboitiz Equity Ventures and San Miguel Pure, you can compare the effects of market volatilities on Aboitiz Equity and San Miguel 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 Aboitiz Equity with a short position of San Miguel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aboitiz Equity and San Miguel.

Diversification Opportunities for Aboitiz Equity and San Miguel

-0.16

Correlation Coefficient

Aboitiz Equity  San Miguel

Good diversification

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

Pair Corralation between Aboitiz Equity and San Miguel

Assuming the 90 days trading horizon Aboitiz Equity Ventures is expected to generate 0.59 times more return on investment than San Miguel. However, Aboitiz Equity Ventures is 1.69 times less risky than San Miguel. It trades about 0.16 of its potential returns per unit of risk. San Miguel Pure is currently generating about -0.09 per unit of risk. If you would invest  3,400  in Aboitiz Equity Ventures on October 10, 2024 and sell it today you would earn a total of  100.00  from holding Aboitiz Equity Ventures or generate 2.94% return on investment over 90 days.

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

Aboitiz Equity Ventures  vs.  San Miguel Pure

Aboitiz Equity Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

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

San Miguel Pure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days San Miguel Pure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, San Miguel is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Aboitiz Equity and San Miguel

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

The idea behind Aboitiz Equity Ventures and San Miguel Pure 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.