Correlation Between Global Standard and Sempio Foods
Can any of the company-specific risk be diversified away by investing in both Global Standard 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 Global Standard and Sempio Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Standard Technology and Sempio Foods Co, you can compare the effects of market volatilities on Global Standard 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 Global Standard with a short position of Sempio Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Standard and Sempio Foods.
Diversification Opportunities for Global Standard and Sempio Foods
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and Sempio is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Global Standard Technology and Sempio Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempio Foods and Global Standard 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 Global Standard Technology 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 Global Standard i.e., Global Standard and Sempio Foods go up and down completely randomly.
Pair Corralation between Global Standard and Sempio Foods
Assuming the 90 days trading horizon Global Standard Technology is expected to generate 1.51 times more return on investment than Sempio Foods. However, Global Standard is 1.51 times more volatile than Sempio Foods Co. It trades about 0.06 of its potential returns per unit of risk. Sempio Foods Co is currently generating about -0.07 per unit of risk. If you would invest 1,662,471 in Global Standard Technology on October 14, 2024 and sell it today you would earn a total of 159,529 from holding Global Standard Technology or generate 9.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Standard Technology vs. Sempio Foods Co
Performance |
| Timeline |
| Global Standard Tech |
| Sempio Foods |
Global Standard and Sempio Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Standard and Sempio Foods
The main advantage of trading using opposite Global Standard and Sempio Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Standard 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.| Global Standard vs. Ssangyong Materials Corp | Global Standard vs. Hotel Shilla Co | Global Standard vs. INNOX Advanced Materials | Global Standard vs. Hyundai Engineering Plastics |
| Sempio Foods vs. Aprogen Healthcare Games | Sempio Foods vs. LG Household Healthcare | Sempio Foods vs. Global Standard Technology | Sempio Foods vs. SeAH Besteel Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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