Correlation Between SAN MIGUEL and Vulcan Materials

Can any of the company-specific risk be diversified away by investing in both SAN MIGUEL and Vulcan Materials 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 Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SAN MIGUEL BREWERY and Vulcan Materials, you can compare the effects of market volatilities on SAN MIGUEL and Vulcan Materials 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 Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAN MIGUEL and Vulcan Materials.

Diversification Opportunities for SAN MIGUEL and Vulcan Materials

-0.1

Correlation Coefficient

SAN MIGUEL  Vulcan Materials

Good diversification

The 3 months correlation between SAN and Vulcan is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding SAN MIGUEL BREWERY and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials 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 BREWERY are associated (or correlated) with Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of SAN MIGUEL i.e., SAN MIGUEL and Vulcan Materials go up and down completely randomly.

Pair Corralation between SAN MIGUEL and Vulcan Materials

Assuming the 90 days trading horizon SAN MIGUEL BREWERY is expected to generate 3.02 times more return on investment than Vulcan Materials. However, SAN MIGUEL is 3.02 times more volatile than Vulcan Materials. It trades about 0.09 of its potential returns per unit of risk. Vulcan Materials is currently generating about 0.04 per unit of risk. If you would invest  8.08  in SAN MIGUEL BREWERY on April 24, 2025 and sell it today you would earn a total of  1.92  from holding SAN MIGUEL BREWERY or generate 23.76% return on investment over 90 days.

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

SAN MIGUEL BREWERY  vs.  Vulcan Materials

SAN MIGUEL BREWERY

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SAN MIGUEL BREWERY are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, SAN MIGUEL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vulcan Materials

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Vulcan Materials is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SAN MIGUEL and Vulcan Materials

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

The idea behind SAN MIGUEL BREWERY and Vulcan Materials 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.