Correlation Between Sempio Foods and National Plastic
Can any of the company-specific risk be diversified away by investing in both Sempio Foods and National Plastic 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 Sempio Foods and National Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sempio Foods Co and National Plastic Co, you can compare the effects of market volatilities on Sempio Foods and National Plastic 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 Sempio Foods with a short position of National Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sempio Foods and National Plastic.
Diversification Opportunities for Sempio Foods and National Plastic
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sempio and National is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sempio Foods Co and National Plastic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Plastic and Sempio 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 Sempio Foods Co are associated (or correlated) with National Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Plastic has no effect on the direction of Sempio Foods i.e., Sempio Foods and National Plastic go up and down completely randomly.
Pair Corralation between Sempio Foods and National Plastic
Assuming the 90 days trading horizon Sempio Foods Co is expected to generate 1.42 times more return on investment than National Plastic. However, Sempio Foods is 1.42 times more volatile than National Plastic Co. It trades about -0.17 of its potential returns per unit of risk. National Plastic Co is currently generating about -0.51 per unit of risk. If you would invest 2,470,000 in Sempio Foods Co on November 3, 2024 and sell it today you would lose (90,000) from holding Sempio Foods Co or give up 3.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sempio Foods Co vs. National Plastic Co
Performance |
| Timeline |
| Sempio Foods |
| National Plastic |
Sempio Foods and National Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sempio Foods and National Plastic
The main advantage of trading using opposite Sempio Foods and National Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempio Foods position performs unexpectedly, National Plastic 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 National Plastic will offset losses from the drop in National Plastic's long position.| Sempio Foods vs. Ssangyong Information Communication | Sempio Foods vs. GS Retail Co | Sempio Foods vs. Korea Information Communications | Sempio Foods vs. Dongil Metal Co |
| National Plastic vs. WONIK Materials CoLtd | National Plastic vs. Lotte Data Communication | National Plastic vs. Ssangyong Materials Corp | National Plastic vs. Lake Materials 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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