Correlation Between China Development and SAN MIGUEL
Can any of the company-specific risk be diversified away by investing in both China Development 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 China Development and SAN MIGUEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Development Bank and SAN MIGUEL BREWERY, you can compare the effects of market volatilities on China Development 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 China Development with a short position of SAN MIGUEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Development and SAN MIGUEL.
Diversification Opportunities for China Development and SAN MIGUEL
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and SAN is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding China Development Bank 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 China Development 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 China Development Bank 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 China Development i.e., China Development and SAN MIGUEL go up and down completely randomly.
Pair Corralation between China Development and SAN MIGUEL
Assuming the 90 days trading horizon China Development Bank is expected to under-perform the SAN MIGUEL. In addition to that, China Development is 3.77 times more volatile than SAN MIGUEL BREWERY. It trades about -0.06 of its total potential returns per unit of risk. SAN MIGUEL BREWERY is currently generating about 0.01 per unit of volatility. If you would invest 10.00 in SAN MIGUEL BREWERY on October 24, 2024 and sell it today you would earn a total of 0.00 from holding SAN MIGUEL BREWERY or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Development Bank vs. SAN MIGUEL BREWERY
Performance |
| Timeline |
| China Development Bank |
| SAN MIGUEL BREWERY |
China Development and SAN MIGUEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Development and SAN MIGUEL
The main advantage of trading using opposite China Development and SAN MIGUEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Development 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.| China Development vs. Apple Inc | China Development vs. Apple Inc | China Development vs. Apple Inc | China Development vs. Apple Inc |
| SAN MIGUEL vs. Darden Restaurants | SAN MIGUEL vs. China Development Bank | SAN MIGUEL vs. Highlight Communications AG | SAN MIGUEL vs. Air Lease |
Check out your portfolio center.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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