Correlation Between San Miguel and BDO Unibank

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

Diversification Opportunities for San Miguel and BDO Unibank

0.18

Correlation Coefficient

San Miguel  BDO Unibank

Average diversification

The 3 months correlation between San and BDO is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding San Miguel Pure and BDO Unibank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BDO Unibank 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 BDO Unibank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BDO Unibank has no effect on the direction of San Miguel i.e., San Miguel and BDO Unibank go up and down completely randomly.

Pair Corralation between San Miguel and BDO Unibank

Assuming the 90 days trading horizon San Miguel Pure is expected to generate 0.59 times more return on investment than BDO Unibank. However, San Miguel Pure is 1.69 times less risky than BDO Unibank. It trades about 0.02 of its potential returns per unit of risk. BDO Unibank is currently generating about 0.01 per unit of risk. If you would invest  4,838  in San Miguel Pure on November 20, 2024 and sell it today you would earn a total of  392.00  from holding San Miguel Pure or generate 8.1% return on investment over 90 days.

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

San Miguel Pure  vs.  BDO Unibank

San Miguel Pure

Risk-Adjusted Performance

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

BDO Unibank

Risk-Adjusted Performance

Very Weak

Over the last 90 days BDO Unibank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with San Miguel and BDO Unibank

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

The idea behind San Miguel Pure and BDO Unibank 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.