Correlation Between San Miguel and Molinos Agro
Can any of the company-specific risk be diversified away by investing in both San Miguel and Molinos Agro 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 Molinos Agro 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 Molinos Agro SA, you can compare the effects of market volatilities on San Miguel and Molinos Agro 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 Molinos Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Miguel and Molinos Agro.
Diversification Opportunities for San Miguel and Molinos Agro
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between San and Molinos is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding San Miguel AG and Molinos Agro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molinos Agro SA 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 Molinos Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molinos Agro SA has no effect on the direction of San Miguel i.e., San Miguel and Molinos Agro go up and down completely randomly.
Pair Corralation between San Miguel and Molinos Agro
Assuming the 90 days trading horizon San Miguel AG is expected to generate 1.17 times more return on investment than Molinos Agro. However, San Miguel is 1.17 times more volatile than Molinos Agro SA. It trades about 0.06 of its potential returns per unit of risk. Molinos Agro SA is currently generating about 0.02 per unit of risk. If you would invest 89,850 in San Miguel AG on September 2, 2024 and sell it today you would earn a total of 40,150 from holding San Miguel AG or generate 44.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
San Miguel AG vs. Molinos Agro SA
Performance |
| Timeline |
| San Miguel AG |
| Molinos Agro SA |
San Miguel and Molinos Agro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with San Miguel and Molinos Agro
The main advantage of trading using opposite San Miguel and Molinos Agro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Miguel position performs unexpectedly, Molinos Agro 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 Molinos Agro will offset losses from the drop in Molinos Agro's long position.| San Miguel vs. Transportadora de Gas | San Miguel vs. United States Steel | San Miguel vs. Harmony Gold Mining | San Miguel vs. Agrometal SAI |
| Molinos Agro vs. Harmony Gold Mining | Molinos Agro vs. Compania de Transporte | Molinos Agro vs. Agrometal SAI |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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