Correlation Between Standard Foods and Namchow Chemical
Can any of the company-specific risk be diversified away by investing in both Standard Foods and Namchow Chemical 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 Standard Foods and Namchow Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Foods Corp and Namchow Chemical Industrial, you can compare the effects of market volatilities on Standard Foods and Namchow Chemical 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 Standard Foods with a short position of Namchow Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Foods and Namchow Chemical.
Diversification Opportunities for Standard Foods and Namchow Chemical
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Standard and Namchow is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Standard Foods Corp and Namchow Chemical Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namchow Chemical Ind and Standard Foods 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 Standard Foods Corp are associated (or correlated) with Namchow Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namchow Chemical Ind has no effect on the direction of Standard Foods i.e., Standard Foods and Namchow Chemical go up and down completely randomly.
Pair Corralation between Standard Foods and Namchow Chemical
Assuming the 90 days trading horizon Standard Foods Corp is expected to under-perform the Namchow Chemical. In addition to that, Standard Foods is 1.02 times more volatile than Namchow Chemical Industrial. It trades about -0.31 of its total potential returns per unit of risk. Namchow Chemical Industrial is currently generating about -0.01 per unit of volatility. If you would invest 4,980 in Namchow Chemical Industrial on October 24, 2024 and sell it today you would lose (10.00) from holding Namchow Chemical Industrial or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Foods Corp vs. Namchow Chemical Industrial
Performance |
| Timeline |
| Standard Foods Corp |
| Namchow Chemical Ind |
Standard Foods and Namchow Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Foods and Namchow Chemical
The main advantage of trading using opposite Standard Foods and Namchow Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Foods position performs unexpectedly, Namchow Chemical 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 Namchow Chemical will offset losses from the drop in Namchow Chemical's long position.| Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. TTET Union Corp | Standard Foods vs. President Chain Store | Standard Foods vs. Charoen Pokphand Enterprise |
| Namchow Chemical vs. Standard Foods Corp | Namchow Chemical vs. TTET Union Corp | Namchow Chemical vs. Uni President Enterprises Corp | Namchow Chemical vs. Charoen Pokphand Enterprise |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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