Correlation Between Standard Foods and Alchip Technologies
Can any of the company-specific risk be diversified away by investing in both Standard Foods and Alchip Technologies 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 Alchip Technologies 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 Alchip Technologies, you can compare the effects of market volatilities on Standard Foods and Alchip Technologies 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 Alchip Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Foods and Alchip Technologies.
Diversification Opportunities for Standard Foods and Alchip Technologies
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Standard and Alchip is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Standard Foods Corp and Alchip Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alchip Technologies 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 Alchip Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alchip Technologies has no effect on the direction of Standard Foods i.e., Standard Foods and Alchip Technologies go up and down completely randomly.
Pair Corralation between Standard Foods and Alchip Technologies
Assuming the 90 days trading horizon Standard Foods is expected to generate 5.84 times less return on investment than Alchip Technologies. But when comparing it to its historical volatility, Standard Foods Corp is 7.92 times less risky than Alchip Technologies. It trades about 0.26 of its potential returns per unit of risk. Alchip Technologies is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 295,000 in Alchip Technologies on November 28, 2024 and sell it today you would earn a total of 35,500 from holding Alchip Technologies or generate 12.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Foods Corp vs. Alchip Technologies
Performance |
| Timeline |
| Standard Foods Corp |
| Alchip Technologies |
Standard Foods and Alchip Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Foods and Alchip Technologies
The main advantage of trading using opposite Standard Foods and Alchip Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Foods position performs unexpectedly, Alchip Technologies 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 Alchip Technologies will offset losses from the drop in Alchip Technologies' 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 |
| Alchip Technologies vs. Global Unichip Corp | Alchip Technologies vs. Asmedia Technology | Alchip Technologies vs. Silergy Corp | Alchip Technologies vs. Unimicron Technology 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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