Correlation Between SAN MIGUEL and Westinghouse Air

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

Diversification Opportunities for SAN MIGUEL and Westinghouse Air

-0.31

Correlation Coefficient

SAN MIGUEL  Westinghouse Air

Very good diversification

The 3 months correlation between SAN and Westinghouse is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding SAN MIGUEL BREWERY and Westinghouse Air Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westinghouse Air Brake 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 Westinghouse Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westinghouse Air Brake has no effect on the direction of SAN MIGUEL i.e., SAN MIGUEL and Westinghouse Air go up and down completely randomly.

Pair Corralation between SAN MIGUEL and Westinghouse Air

Assuming the 90 days trading horizon SAN MIGUEL is expected to generate 3.14 times less return on investment than Westinghouse Air. In addition to that, SAN MIGUEL is 2.71 times more volatile than Westinghouse Air Brake. It trades about 0.02 of its total potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.16 per unit of volatility. If you would invest  17,401  in Westinghouse Air Brake on October 25, 2024 and sell it today you would earn a total of  2,464  from holding Westinghouse Air Brake or generate 14.16% return on investment over 90 days.

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

SAN MIGUEL BREWERY  vs.  Westinghouse Air Brake

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Westinghouse Air Brake

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Westinghouse Air Brake are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Westinghouse Air reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAN MIGUEL and Westinghouse Air

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

The idea behind SAN MIGUEL BREWERY and Westinghouse Air Brake 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.