Correlation Between San Miguel and Aboitiz Equity

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

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

Diversification Opportunities for San Miguel and Aboitiz Equity

-0.16

Correlation Coefficient

San Miguel  Aboitiz Equity

Good diversification

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

Pair Corralation between San Miguel and Aboitiz Equity

Assuming the 90 days trading horizon San Miguel Pure is expected to under-perform the Aboitiz Equity. In addition to that, San Miguel is 1.69 times more volatile than Aboitiz Equity Ventures. It trades about -0.09 of its total potential returns per unit of risk. Aboitiz Equity Ventures is currently generating about 0.16 per unit of volatility. 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

San Miguel Pure  vs.  Aboitiz Equity Ventures

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.

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.

Pair Trading with San Miguel and Aboitiz Equity

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

The idea behind San Miguel Pure and Aboitiz Equity Ventures 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.