Correlation Between Chia and San Miguel
Can any of the company-specific risk be diversified away by investing in both Chia and San Miguel 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 Chia and San Miguel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia and San Miguel Pure, you can compare the effects of market volatilities on Chia and San Miguel 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 Chia with a short position of San Miguel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia and San Miguel.
Diversification Opportunities for Chia and San Miguel
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chia and San is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Chia and San Miguel Pure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Miguel Pure and Chia 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 Chia are associated (or correlated) with San Miguel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Miguel Pure has no effect on the direction of Chia i.e., Chia and San Miguel go up and down completely randomly.
Pair Corralation between Chia and San Miguel
Assuming the 90 days trading horizon Chia is expected to generate 4.1 times more return on investment than San Miguel. However, Chia is 4.1 times more volatile than San Miguel Pure. It trades about 0.13 of its potential returns per unit of risk. San Miguel Pure is currently generating about -0.02 per unit of risk. If you would invest 2,052 in Chia on October 21, 2024 and sell it today you would earn a total of 333.00 from holding Chia or generate 16.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Chia vs. San Miguel Pure
Performance |
| Timeline |
| Chia |
| San Miguel Pure |
Chia and San Miguel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia and San Miguel
The main advantage of trading using opposite Chia and San Miguel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia position performs unexpectedly, San Miguel 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 San Miguel will offset losses from the drop in San Miguel's long position.The idea behind Chia and San Miguel Pure pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| San Miguel vs. Monde Nissin Corp | San Miguel vs. Liberty Flour Mills | San Miguel vs. Alliance Select Foods | San Miguel vs. Del Monte Pacific |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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