Correlation Between FIRST SHIP and SAN MIGUEL
Can any of the company-specific risk be diversified away by investing in both FIRST SHIP 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 FIRST SHIP and SAN MIGUEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIRST SHIP LEASE and SAN MIGUEL BREWERY, you can compare the effects of market volatilities on FIRST SHIP 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 FIRST SHIP with a short position of SAN MIGUEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST SHIP and SAN MIGUEL.
Diversification Opportunities for FIRST SHIP and SAN MIGUEL
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FIRST and SAN is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SHIP LEASE 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 FIRST SHIP 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 FIRST SHIP LEASE 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 FIRST SHIP i.e., FIRST SHIP and SAN MIGUEL go up and down completely randomly.
Pair Corralation between FIRST SHIP and SAN MIGUEL
Assuming the 90 days horizon FIRST SHIP LEASE is expected to generate 1.78 times more return on investment than SAN MIGUEL. However, FIRST SHIP is 1.78 times more volatile than SAN MIGUEL BREWERY. It trades about 0.04 of its potential returns per unit of risk. SAN MIGUEL BREWERY is currently generating about 0.06 per unit of risk. If you would invest 2.68 in FIRST SHIP LEASE on October 30, 2024 and sell it today you would lose (0.48) from holding FIRST SHIP LEASE or give up 17.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIRST SHIP LEASE vs. SAN MIGUEL BREWERY
Performance |
| Timeline |
| FIRST SHIP LEASE |
| SAN MIGUEL BREWERY |
FIRST SHIP and SAN MIGUEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIRST SHIP and SAN MIGUEL
The main advantage of trading using opposite FIRST SHIP and SAN MIGUEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST SHIP 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.| FIRST SHIP vs. Liberty Broadband | FIRST SHIP vs. Addtech AB | FIRST SHIP vs. NAGOYA RAILROAD | FIRST SHIP vs. Amkor Technology |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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