Correlation Between San Miguel and National Health

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

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

Diversification Opportunities for San Miguel and National Health

-0.24

Correlation Coefficient

San Miguel  National Health

Very good diversification

The 3 months correlation between San and National is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding San Miguel and National Health Scan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Scan 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Scan has no effect on the direction of San Miguel i.e., San Miguel and National Health go up and down completely randomly.

Pair Corralation between San Miguel and National Health

Assuming the 90 days horizon San Miguel is expected to generate 70.58 times less return on investment than National Health. But when comparing it to its historical volatility, San Miguel is 5.14 times less risky than National Health. It trades about 0.01 of its potential returns per unit of risk. National Health Scan is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1.10  in National Health Scan on December 28, 2024 and sell it today you would lose (0.40) from holding National Health Scan or give up 36.36% of portfolio value over 90 days.

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

San Miguel  vs.  National Health Scan

San Miguel

Risk-Adjusted Performance

Very Weak

Over the last 90 days San Miguel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, San Miguel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

National Health Scan

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Health Scan are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, National Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with San Miguel and National Health

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

The idea behind San Miguel and National Health Scan 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.