Correlation Between San Miguel and Ayala

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

By analyzing existing cross correlation between San Miguel and Ayala, you can compare the effects of market volatilities on San Miguel and Ayala 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 Ayala. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Miguel and Ayala.

Diversification Opportunities for San Miguel and Ayala

0.0

Correlation Coefficient

San Miguel  Ayala

Pay attention - limited upside

The 3 months correlation between San and Ayala is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding San Miguel and Ayala in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayala 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 are associated (or correlated) with Ayala. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayala has no effect on the direction of San Miguel i.e., San Miguel and Ayala go up and down completely randomly.

Pair Corralation between San Miguel and Ayala

Assuming the 90 days horizon San Miguel is expected to generate 4.62 times more return on investment than Ayala. However, San Miguel is 4.62 times more volatile than Ayala. It trades about 0.05 of its potential returns per unit of risk. Ayala is currently generating about 0.13 per unit of risk. If you would invest  145.00  in San Miguel on September 1, 2024 and sell it today you would earn a total of  17.00  from holding San Miguel or generate 11.72% return on investment over 90 days.

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

San Miguel  vs.  Ayala

San Miguel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in San Miguel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, San Miguel reported solid returns over the last few months and may actually be approaching a breakup point.

Ayala

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ayala are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Ayala reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with San Miguel and Ayala

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

The idea behind San Miguel and Ayala 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.