Correlation Between San Miguel and Ayala Corp

Can any of the company-specific risk be diversified away by investing in both San Miguel and Ayala Corp 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 Ayala Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between San Miguel Pure and Ayala Corp, you can compare the effects of market volatilities on San Miguel and Ayala Corp 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 Ayala Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Miguel and Ayala Corp.

Diversification Opportunities for San Miguel and Ayala Corp

-0.09

Correlation Coefficient

San Miguel  Ayala Corp

Good diversification

The 3 months correlation between San and Ayala is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding San Miguel Pure and Ayala Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayala Corp 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 Pure are associated (or correlated) with Ayala Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayala Corp has no effect on the direction of San Miguel i.e., San Miguel and Ayala Corp go up and down completely randomly.

Pair Corralation between San Miguel and Ayala Corp

Assuming the 90 days trading horizon San Miguel Pure is expected to generate 1.0 times more return on investment than Ayala Corp. However, San Miguel is 1.0 times more volatile than Ayala Corp. It trades about 0.1 of its potential returns per unit of risk. Ayala Corp is currently generating about -0.27 per unit of risk. If you would invest  5,210  in San Miguel Pure on September 26, 2024 and sell it today you would earn a total of  190.00  from holding San Miguel Pure or generate 3.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

San Miguel Pure  vs.  Ayala Corp

San Miguel Pure

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in San Miguel Pure are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, San Miguel is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ayala Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ayala Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with San Miguel and Ayala Corp

The main advantage of trading using opposite San Miguel and Ayala Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Miguel position performs unexpectedly, Ayala Corp 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 Ayala Corp will offset losses from the drop in Ayala Corp's long position.

The idea behind San Miguel Pure and Ayala Corp 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.