Correlation Between Korea Petro and Sempio Foods
Can any of the company-specific risk be diversified away by investing in both Korea Petro and Sempio Foods 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 Korea Petro and Sempio Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Petro Chemical and Sempio Foods Co, you can compare the effects of market volatilities on Korea Petro and Sempio Foods 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 Korea Petro with a short position of Sempio Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Petro and Sempio Foods.
Diversification Opportunities for Korea Petro and Sempio Foods
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Sempio is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Korea Petro Chemical and Sempio Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempio Foods and Korea Petro 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 Korea Petro Chemical are associated (or correlated) with Sempio Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sempio Foods has no effect on the direction of Korea Petro i.e., Korea Petro and Sempio Foods go up and down completely randomly.
Pair Corralation between Korea Petro and Sempio Foods
Assuming the 90 days trading horizon Korea Petro Chemical is expected to under-perform the Sempio Foods. In addition to that, Korea Petro is 1.39 times more volatile than Sempio Foods Co. It trades about -0.32 of its total potential returns per unit of risk. Sempio Foods Co is currently generating about -0.25 per unit of volatility. If you would invest 2,910,000 in Sempio Foods Co on August 31, 2024 and sell it today you would lose (285,000) from holding Sempio Foods Co or give up 9.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Petro Chemical vs. Sempio Foods Co
Performance |
| Timeline |
| Korea Petro Chemical |
| Sempio Foods |
Korea Petro and Sempio Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Petro and Sempio Foods
The main advantage of trading using opposite Korea Petro and Sempio Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Petro position performs unexpectedly, Sempio Foods 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 Sempio Foods will offset losses from the drop in Sempio Foods' long position.| Korea Petro vs. LG Chemicals | Korea Petro vs. POSCO Holdings | Korea Petro vs. Hanwha Solutions | Korea Petro vs. Lotte Chemical Corp |
| Sempio Foods vs. Cots Technology Co | Sempio Foods vs. Taeyang Metal Industrial | Sempio Foods vs. Hanjoo Light Metal | Sempio Foods vs. Amogreentech Co |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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