Correlation Between SAN MIGUEL and VITEC SOFTWARE

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

Diversification Opportunities for SAN MIGUEL and VITEC SOFTWARE

-0.12

Correlation Coefficient

SAN MIGUEL  VITEC SOFTWARE

Good diversification

The 3 months correlation between SAN and VITEC is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SAN MIGUEL BREWERY and VITEC SOFTWARE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VITEC SOFTWARE GROUP 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 VITEC SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VITEC SOFTWARE GROUP has no effect on the direction of SAN MIGUEL i.e., SAN MIGUEL and VITEC SOFTWARE go up and down completely randomly.

Pair Corralation between SAN MIGUEL and VITEC SOFTWARE

Assuming the 90 days trading horizon SAN MIGUEL is expected to generate 12.16 times less return on investment than VITEC SOFTWARE. In addition to that, SAN MIGUEL is 3.05 times more volatile than VITEC SOFTWARE GROUP. It trades about 0.02 of its total potential returns per unit of risk. VITEC SOFTWARE GROUP is currently generating about 0.59 per unit of volatility. If you would invest  4,338  in VITEC SOFTWARE GROUP on October 10, 2024 and sell it today you would earn a total of  532.00  from holding VITEC SOFTWARE GROUP or generate 12.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

SAN MIGUEL BREWERY  vs.  VITEC SOFTWARE GROUP

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.

VITEC SOFTWARE GROUP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VITEC SOFTWARE GROUP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, VITEC SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAN MIGUEL and VITEC SOFTWARE

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

The idea behind SAN MIGUEL BREWERY and VITEC SOFTWARE GROUP 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.