Correlation Between Edesa Holding and San Miguel

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Can any of the company-specific risk be diversified away by investing in both Edesa Holding 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 Edesa Holding and San Miguel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edesa Holding SA and San Miguel AG, you can compare the effects of market volatilities on Edesa Holding 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 Edesa Holding with a short position of San Miguel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edesa Holding and San Miguel.

Diversification Opportunities for Edesa Holding and San Miguel

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Edesa and San is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Edesa Holding SA and San Miguel AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Miguel AG and Edesa Holding 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 Edesa Holding SA 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 AG has no effect on the direction of Edesa Holding i.e., Edesa Holding and San Miguel go up and down completely randomly.

Pair Corralation between Edesa Holding and San Miguel

Assuming the 90 days trading horizon Edesa Holding is expected to generate 16.73 times less return on investment than San Miguel. But when comparing it to its historical volatility, Edesa Holding SA is 30.13 times less risky than San Miguel. It trades about 0.12 of its potential returns per unit of risk. San Miguel AG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  11,750  in San Miguel AG on September 12, 2024 and sell it today you would earn a total of  128,750  from holding San Miguel AG or generate 1095.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy99.79%
ValuesDaily Returns

Edesa Holding SA  vs.  San Miguel AG

 Performance 
       Timeline  
Edesa Holding SA 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Edesa Holding SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Edesa Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
San Miguel AG 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in San Miguel AG are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, San Miguel sustained solid returns over the last few months and may actually be approaching a breakup point.

Edesa Holding and San Miguel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Edesa Holding and San Miguel

The main advantage of trading using opposite Edesa Holding and San Miguel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edesa Holding 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 Edesa Holding SA and San Miguel AG 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.
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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