Correlation Between San Miguel and National Reinsurance
Can any of the company-specific risk be diversified away by investing in both San Miguel and National Reinsurance 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 National Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between San Miguel Corp and National Reinsurance, you can compare the effects of market volatilities on San Miguel and National Reinsurance 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 National Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Miguel and National Reinsurance.
Diversification Opportunities for San Miguel and National Reinsurance
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between San and National is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding San Miguel Corp and National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Reinsurance 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 Corp are associated (or correlated) with National Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Reinsurance has no effect on the direction of San Miguel i.e., San Miguel and National Reinsurance go up and down completely randomly.
Pair Corralation between San Miguel and National Reinsurance
Assuming the 90 days trading horizon San Miguel Corp is expected to under-perform the National Reinsurance. But the stock apears to be less risky and, when comparing its historical volatility, San Miguel Corp is 4.85 times less risky than National Reinsurance. The stock trades about -0.04 of its potential returns per unit of risk. The National Reinsurance is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 40.00 in National Reinsurance on September 14, 2024 and sell it today you would earn a total of 30.00 from holding National Reinsurance or generate 75.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 73.66% |
| Values | Daily Returns |
San Miguel Corp vs. National Reinsurance
Performance |
| Timeline |
| San Miguel Corp |
| National Reinsurance |
San Miguel and National Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with San Miguel and National Reinsurance
The main advantage of trading using opposite San Miguel and National Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Miguel position performs unexpectedly, National Reinsurance 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 National Reinsurance will offset losses from the drop in National Reinsurance's long position.| San Miguel vs. National Reinsurance | San Miguel vs. Jollibee Foods Corp | San Miguel vs. Concepcion Industrial Corp | San Miguel vs. Asia United Bank |
| National Reinsurance vs. Dizon Copper Silver | National Reinsurance vs. GT Capital Holdings | National Reinsurance vs. Allhome Corp | National Reinsurance vs. Jollibee Foods Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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