Correlation Between National Health and San Miguel

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

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

Diversification Opportunities for National Health and San Miguel

-0.24

Correlation Coefficient

National Health  San Miguel

Very good diversification

The 3 months correlation between National and San is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding National Health Scan and San Miguel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Miguel and National Health 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 National Health Scan 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 National Health i.e., National Health and San Miguel go up and down completely randomly.

Pair Corralation between National Health and San Miguel

Given the investment horizon of 90 days National Health Scan is expected to generate 5.14 times more return on investment than San Miguel. However, National Health is 5.14 times more volatile than San Miguel. It trades about 0.08 of its potential returns per unit of risk. San Miguel is currently generating about 0.01 per unit of risk. If you would invest  1.10  in National Health Scan on December 28, 2024 and sell it today you would lose (0.40) from holding National Health Scan or give up 36.36% of portfolio value over 90 days.

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

National Health Scan  vs.  San Miguel

National Health Scan

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Health Scan are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, National Health reported solid returns over the last few months and may actually be approaching a breakup point.

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 National Health and San Miguel

The main advantage of trading using opposite National Health and San Miguel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health 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 National Health Scan 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.