Correlation Between SAN MIGUEL and NexGen Energy

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

By analyzing existing cross correlation between SAN MIGUEL BREWERY and NexGen Energy, you can compare the effects of market volatilities on SAN MIGUEL and NexGen Energy 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 NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAN MIGUEL and NexGen Energy.

Diversification Opportunities for SAN MIGUEL and NexGen Energy

-0.52

Correlation Coefficient

SAN MIGUEL  NexGen Energy

Excellent diversification

The 3 months correlation between SAN and NexGen is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding SAN MIGUEL BREWERY and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy 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 BREWERY are associated (or correlated) with NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of SAN MIGUEL i.e., SAN MIGUEL and NexGen Energy go up and down completely randomly.

Pair Corralation between SAN MIGUEL and NexGen Energy

Assuming the 90 days trading horizon SAN MIGUEL BREWERY is expected to under-perform the NexGen Energy. But the stock apears to be less risky and, when comparing its historical volatility, SAN MIGUEL BREWERY is 1.04 times less risky than NexGen Energy. The stock trades about -0.09 of its potential returns per unit of risk. The NexGen Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  672.00  in NexGen Energy on October 7, 2024 and sell it today you would earn a total of  44.00  from holding NexGen Energy or generate 6.55% return on investment over 90 days.

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

SAN MIGUEL BREWERY  vs.  NexGen Energy

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 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.

NexGen Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NexGen Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NexGen Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAN MIGUEL and NexGen Energy

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

The idea behind SAN MIGUEL BREWERY and NexGen Energy 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.