Correlation Between Mid-America Apartment and SAN MIGUEL

Can any of the company-specific risk be diversified away by investing in both Mid-America Apartment 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 Mid-America Apartment and SAN MIGUEL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mid America Apartment Communities and SAN MIGUEL BREWERY, you can compare the effects of market volatilities on Mid-America Apartment 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 Mid-America Apartment with a short position of SAN MIGUEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid-America Apartment and SAN MIGUEL.

Diversification Opportunities for Mid-America Apartment and SAN MIGUEL

-0.39

Correlation Coefficient

Mid-America Apartment  SAN MIGUEL

Very good diversification

The 3 months correlation between Mid-America and SAN is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mid America Apartment Communit and SAN MIGUEL BREWERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAN MIGUEL BREWERY and Mid-America Apartment 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 Mid America Apartment Communities 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 BREWERY has no effect on the direction of Mid-America Apartment i.e., Mid-America Apartment and SAN MIGUEL go up and down completely randomly.

Pair Corralation between Mid-America Apartment and SAN MIGUEL

Assuming the 90 days horizon Mid America Apartment Communities is expected to under-perform the SAN MIGUEL. But the stock apears to be less risky and, when comparing its historical volatility, Mid America Apartment Communities is 2.27 times less risky than SAN MIGUEL. The stock trades about -0.16 of its potential returns per unit of risk. The SAN MIGUEL BREWERY is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  10.00  in SAN MIGUEL BREWERY on October 10, 2024 and sell it today you would earn a total of  0.00  from holding SAN MIGUEL BREWERY or generate 0.0% return on investment over 90 days.

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

Mid America Apartment Communit  vs.  SAN MIGUEL BREWERY

Mid America Apartment

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mid America Apartment Communities are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Mid-America Apartment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SAN MIGUEL BREWERY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAN MIGUEL BREWERY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Mid-America Apartment and SAN MIGUEL

The main advantage of trading using opposite Mid-America Apartment and SAN MIGUEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid-America Apartment 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 Mid America Apartment Communities and SAN MIGUEL BREWERY 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.