Correlation Between SAN MIGUEL and NATIONAL HEALTHCARE

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

Diversification Opportunities for SAN MIGUEL and NATIONAL HEALTHCARE

0.46

Correlation Coefficient

SAN MIGUEL  NATIONAL HEALTHCARE

Very weak diversification

The 3 months correlation between SAN and NATIONAL is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SAN MIGUEL BREWERY and NATIONAL HEALTHCARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL HEALTHCARE 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 NATIONAL HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL HEALTHCARE has no effect on the direction of SAN MIGUEL i.e., SAN MIGUEL and NATIONAL HEALTHCARE go up and down completely randomly.

Pair Corralation between SAN MIGUEL and NATIONAL HEALTHCARE

Assuming the 90 days trading horizon SAN MIGUEL BREWERY is expected to generate 1.61 times more return on investment than NATIONAL HEALTHCARE. However, SAN MIGUEL is 1.61 times more volatile than NATIONAL HEALTHCARE. It trades about 0.2 of its potential returns per unit of risk. NATIONAL HEALTHCARE is currently generating about -0.45 per unit of risk. If you would invest  10.00  in SAN MIGUEL BREWERY on October 27, 2024 and sell it today you would earn a total of  1.00  from holding SAN MIGUEL BREWERY or generate 10.0% return on investment over 90 days.

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

SAN MIGUEL BREWERY  vs.  NATIONAL HEALTHCARE

SAN MIGUEL BREWERY

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SAN MIGUEL BREWERY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

NATIONAL HEALTHCARE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NATIONAL HEALTHCARE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile 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 SAN MIGUEL and NATIONAL HEALTHCARE

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

The idea behind SAN MIGUEL BREWERY and NATIONAL HEALTHCARE 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.