Correlation Between SAN MIGUEL and Commerzbank

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

Diversification Opportunities for SAN MIGUEL and Commerzbank

0.38

Correlation Coefficient

SAN MIGUEL  Commerzbank

Weak diversification

The 3 months correlation between SAN and Commerzbank is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding SAN MIGUEL BREWERY and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG 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 Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of SAN MIGUEL i.e., SAN MIGUEL and Commerzbank go up and down completely randomly.

Pair Corralation between SAN MIGUEL and Commerzbank

Assuming the 90 days trading horizon SAN MIGUEL BREWERY is expected to under-perform the Commerzbank. In addition to that, SAN MIGUEL is 1.8 times more volatile than Commerzbank AG. It trades about -0.09 of its total potential returns per unit of risk. Commerzbank AG is currently generating about -0.04 per unit of volatility. If you would invest  1,580  in Commerzbank AG on October 7, 2024 and sell it today you would lose (70.00) from holding Commerzbank AG or give up 4.43% of portfolio value over 90 days.

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

SAN MIGUEL BREWERY  vs.  Commerzbank AG

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.

Commerzbank AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commerzbank AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SAN MIGUEL and Commerzbank

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

The idea behind SAN MIGUEL BREWERY and Commerzbank AG 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.