Correlation Between San Miguel and Ledesma SAAI
Can any of the company-specific risk be diversified away by investing in both San Miguel and Ledesma SAAI 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 Ledesma SAAI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between San Miguel AG and Ledesma SAAI, you can compare the effects of market volatilities on San Miguel and Ledesma SAAI 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 Ledesma SAAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Miguel and Ledesma SAAI.
Diversification Opportunities for San Miguel and Ledesma SAAI
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between San and Ledesma is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding San Miguel AG and Ledesma SAAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ledesma SAAI 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 AG are associated (or correlated) with Ledesma SAAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ledesma SAAI has no effect on the direction of San Miguel i.e., San Miguel and Ledesma SAAI go up and down completely randomly.
Pair Corralation between San Miguel and Ledesma SAAI
Assuming the 90 days trading horizon San Miguel AG is expected to under-perform the Ledesma SAAI. In addition to that, San Miguel is 1.75 times more volatile than Ledesma SAAI. It trades about -0.24 of its total potential returns per unit of risk. Ledesma SAAI is currently generating about -0.08 per unit of volatility. If you would invest 146,000 in Ledesma SAAI on October 20, 2024 and sell it today you would lose (4,500) from holding Ledesma SAAI or give up 3.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
San Miguel AG vs. Ledesma SAAI
Performance |
| Timeline |
| San Miguel AG |
| Ledesma SAAI |
San Miguel and Ledesma SAAI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with San Miguel and Ledesma SAAI
The main advantage of trading using opposite San Miguel and Ledesma SAAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Miguel position performs unexpectedly, Ledesma SAAI 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 Ledesma SAAI will offset losses from the drop in Ledesma SAAI's long position.| San Miguel vs. Molinos Agro SA | San Miguel vs. Cresud SA | San Miguel vs. Ledesma SAAI | San Miguel vs. Inversora Juramento SA |
| Ledesma SAAI vs. Molinos Agro SA | Ledesma SAAI vs. Cresud SA | Ledesma SAAI vs. San Miguel AG | Ledesma SAAI vs. Inversora Juramento SA |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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