Correlation Between SM Investments and Emperador
Can any of the company-specific risk be diversified away by investing in both SM Investments and Emperador 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 SM Investments and Emperador into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Investments Corp and Emperador, you can compare the effects of market volatilities on SM Investments and Emperador 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 SM Investments with a short position of Emperador. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and Emperador.
Diversification Opportunities for SM Investments and Emperador
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SM Investments and Emperador is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments Corp and Emperador in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emperador and SM Investments 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 SM Investments Corp are associated (or correlated) with Emperador. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emperador has no effect on the direction of SM Investments i.e., SM Investments and Emperador go up and down completely randomly.
Pair Corralation between SM Investments and Emperador
Assuming the 90 days trading horizon SM Investments Corp is expected to under-perform the Emperador. In addition to that, SM Investments is 9.82 times more volatile than Emperador. It trades about -0.04 of its total potential returns per unit of risk. Emperador is currently generating about -0.15 per unit of volatility. If you would invest 1,818 in Emperador on September 13, 2024 and sell it today you would lose (18.00) from holding Emperador or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Investments Corp vs. Emperador
Performance |
| Timeline |
| SM Investments Corp |
| Emperador |
SM Investments and Emperador Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Investments and Emperador
The main advantage of trading using opposite SM Investments and Emperador positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Investments position performs unexpectedly, Emperador 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 Emperador will offset losses from the drop in Emperador's long position.| SM Investments vs. Ayala Corp | SM Investments vs. Alliance Global Group | SM Investments vs. DMCI Holdings |
| Emperador vs. SM Investments Corp | Emperador vs. San Miguel Pure | Emperador vs. Ayala Corp | Emperador vs. Ayala Land |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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