Correlation Between San Miguel and Jardine Matheson

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

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

Diversification Opportunities for San Miguel and Jardine Matheson

0.33

Correlation Coefficient

San Miguel  Jardine Matheson

Weak diversification

The 3 months correlation between San and Jardine is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding San Miguel and Jardine Matheson Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jardine Matheson Holdings 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 Jardine Matheson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jardine Matheson Holdings has no effect on the direction of San Miguel i.e., San Miguel and Jardine Matheson go up and down completely randomly.

Pair Corralation between San Miguel and Jardine Matheson

Assuming the 90 days horizon San Miguel is expected to generate 5.9 times less return on investment than Jardine Matheson. In addition to that, San Miguel is 1.74 times more volatile than Jardine Matheson Holdings. It trades about 0.01 of its total potential returns per unit of risk. Jardine Matheson Holdings is currently generating about 0.06 per unit of volatility. If you would invest  3,814  in Jardine Matheson Holdings on December 28, 2024 and sell it today you would earn a total of  331.00  from holding Jardine Matheson Holdings or generate 8.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.67%
Values	Daily Returns

San Miguel  vs.  Jardine Matheson Holdings

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.

Jardine Matheson Holdings

Risk-Adjusted Performance

Insignificant

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

Pair Trading with San Miguel and Jardine Matheson

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

The idea behind San Miguel and Jardine Matheson Holdings 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.