Correlation Between RCABS and San Miguel

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

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

Diversification Opportunities for RCABS and San Miguel

0.18

Correlation Coefficient

RCABS  San Miguel

Average diversification

The 3 months correlation between RCABS and San is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding RCABS Inc and San Miguel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Miguel and RCABS 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 RCABS Inc 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 has no effect on the direction of RCABS i.e., RCABS and San Miguel go up and down completely randomly.

Pair Corralation between RCABS and San Miguel

Given the investment horizon of 90 days RCABS Inc is expected to generate 2.32 times more return on investment than San Miguel. However, RCABS is 2.32 times more volatile than San Miguel. It trades about 0.0 of its potential returns per unit of risk. San Miguel is currently generating about 0.01 per unit of risk. If you would invest  0.08  in RCABS Inc on December 27, 2024 and sell it today you would lose (0.03) from holding RCABS Inc or give up 37.5% of portfolio value over 90 days.

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

RCABS Inc  vs.  San Miguel

RCABS Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days RCABS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RCABS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

San Miguel

Risk-Adjusted Performance

Very Weak

Over the last 90 days San Miguel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, San Miguel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RCABS and San Miguel

The main advantage of trading using opposite RCABS and San Miguel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCABS 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 RCABS Inc and San Miguel 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.