Correlation Between Northern Data and SAN MIGUEL

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

By analyzing existing cross correlation between Northern Data AG and SAN MIGUEL BREWERY, you can compare the effects of market volatilities on Northern Data and SAN MIGUEL 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 Northern Data with a short position of SAN MIGUEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Data and SAN MIGUEL.

Diversification Opportunities for Northern Data and SAN MIGUEL

-0.23

Correlation Coefficient

Northern Data  SAN MIGUEL

Very good diversification

The 3 months correlation between Northern and SAN is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Northern Data AG and SAN MIGUEL BREWERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAN MIGUEL BREWERY and Northern Data 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 Northern Data AG are associated (or correlated) with SAN MIGUEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAN MIGUEL BREWERY has no effect on the direction of Northern Data i.e., Northern Data and SAN MIGUEL go up and down completely randomly.

Pair Corralation between Northern Data and SAN MIGUEL

Assuming the 90 days trading horizon Northern Data AG is expected to under-perform the SAN MIGUEL. But the stock apears to be less risky and, when comparing its historical volatility, Northern Data AG is 1.08 times less risky than SAN MIGUEL. The stock trades about -0.21 of its potential returns per unit of risk. The SAN MIGUEL BREWERY is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10.00  in SAN MIGUEL BREWERY on December 22, 2024 and sell it today you would lose (0.50) from holding SAN MIGUEL BREWERY or give up 5.0% of portfolio value over 90 days.

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

Northern Data AG  vs.  SAN MIGUEL BREWERY

Northern Data AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northern Data AG 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SAN MIGUEL BREWERY

Risk-Adjusted Performance

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.

Pair Trading with Northern Data and SAN MIGUEL

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

The idea behind Northern Data AG and SAN MIGUEL BREWERY 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.