Correlation Between Daejoo Electronic and Sempio Foods
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic 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 Daejoo Electronic and Sempio Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daejoo Electronic Materials and Sempio Foods Co, you can compare the effects of market volatilities on Daejoo Electronic 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 Daejoo Electronic with a short position of Sempio Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Sempio Foods.
Diversification Opportunities for Daejoo Electronic and Sempio Foods
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daejoo and Sempio is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Sempio Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempio Foods and Daejoo Electronic 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 Daejoo Electronic Materials 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 Daejoo Electronic i.e., Daejoo Electronic and Sempio Foods go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Sempio Foods
Assuming the 90 days trading horizon Daejoo Electronic is expected to generate 15.48 times less return on investment than Sempio Foods. In addition to that, Daejoo Electronic is 1.77 times more volatile than Sempio Foods Co. It trades about 0.0 of its total potential returns per unit of risk. Sempio Foods Co is currently generating about 0.06 per unit of volatility. If you would invest 2,520,000 in Sempio Foods Co on October 12, 2024 and sell it today you would earn a total of 45,000 from holding Sempio Foods Co or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Sempio Foods Co
Performance |
| Timeline |
| Daejoo Electronic |
| Sempio Foods |
Daejoo Electronic and Sempio Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Sempio Foods
The main advantage of trading using opposite Daejoo Electronic and Sempio Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic 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.The idea behind Daejoo Electronic Materials and Sempio Foods Co 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.| Sempio Foods vs. Samyang Foods Co | Sempio Foods vs. Haitai Confectionery Foods | Sempio Foods vs. Sangsangin Investment Securities | Sempio Foods vs. Hankukpackage 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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