Correlation Between STI Education and San Miguel

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

By analyzing existing cross correlation between STI Education Systems and San Miguel Corp, you can compare the effects of market volatilities on STI Education 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 STI Education with a short position of San Miguel. Check out your portfolio center. Please also check ongoing floating volatility patterns of STI Education and San Miguel.

Diversification Opportunities for STI Education and San Miguel

0.43

Correlation Coefficient

STI Education  San Miguel

Very weak diversification

The 3 months correlation between STI and San is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding STI Education Systems and San Miguel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Miguel Corp and STI Education 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 STI Education Systems 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 Corp has no effect on the direction of STI Education i.e., STI Education and San Miguel go up and down completely randomly.

Pair Corralation between STI Education and San Miguel

Assuming the 90 days trading horizon STI Education Systems is expected to generate 1.67 times more return on investment than San Miguel. However, STI Education is 1.67 times more volatile than San Miguel Corp. It trades about 0.37 of its potential returns per unit of risk. San Miguel Corp is currently generating about 0.12 per unit of risk. If you would invest  124.00  in STI Education Systems on October 11, 2024 and sell it today you would earn a total of  18.00  from holding STI Education Systems or generate 14.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.12%
Values	Daily Returns

STI Education Systems  vs.  San Miguel Corp

STI Education Systems

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STI Education Systems are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, STI Education exhibited solid returns over the last few months and may actually be approaching a breakup point.

San Miguel Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in San Miguel Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, San Miguel is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with STI Education and San Miguel

The main advantage of trading using opposite STI Education and San Miguel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STI Education 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 STI Education Systems and San Miguel Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.