Correlation Between SAN MIGUEL and Sanyo Chemical
Can any of the company-specific risk be diversified away by investing in both SAN MIGUEL and Sanyo Chemical 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 Sanyo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAN MIGUEL BREWERY and Sanyo Chemical Industries, you can compare the effects of market volatilities on SAN MIGUEL and Sanyo Chemical 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 Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAN MIGUEL and Sanyo Chemical.
Diversification Opportunities for SAN MIGUEL and Sanyo Chemical
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SAN and Sanyo is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SAN MIGUEL BREWERY and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries 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 BREWERY are associated (or correlated) with Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of SAN MIGUEL i.e., SAN MIGUEL and Sanyo Chemical go up and down completely randomly.
Pair Corralation between SAN MIGUEL and Sanyo Chemical
Assuming the 90 days trading horizon SAN MIGUEL BREWERY is expected to under-perform the Sanyo Chemical. But the stock apears to be less risky and, when comparing its historical volatility, SAN MIGUEL BREWERY is 1.12 times less risky than Sanyo Chemical. The stock trades about -0.25 of its potential returns per unit of risk. The Sanyo Chemical Industries is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 2,460 in Sanyo Chemical Industries on October 17, 2024 and sell it today you would lose (60.00) from holding Sanyo Chemical Industries or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAN MIGUEL BREWERY vs. Sanyo Chemical Industries
Performance |
| Timeline |
| SAN MIGUEL BREWERY |
| Sanyo Chemical Industries |
SAN MIGUEL and Sanyo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAN MIGUEL and Sanyo Chemical
The main advantage of trading using opposite SAN MIGUEL and Sanyo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAN MIGUEL position performs unexpectedly, Sanyo Chemical 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 Sanyo Chemical will offset losses from the drop in Sanyo Chemical's long position.| SAN MIGUEL vs. InPlay Oil Corp | SAN MIGUEL vs. AGF Management Limited | SAN MIGUEL vs. Playtech plc | SAN MIGUEL vs. Brockhaus Capital Management |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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