Correlation Between Sempio Foods and Korea Petro
Can any of the company-specific risk be diversified away by investing in both Sempio Foods and Korea Petro 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 Korea Petro 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 Korea Petro Chemical, you can compare the effects of market volatilities on Sempio Foods and Korea Petro 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 Korea Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sempio Foods and Korea Petro.
Diversification Opportunities for Sempio Foods and Korea Petro
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sempio and Korea is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sempio Foods Co and Korea Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Petro Chemical 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 Korea Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Petro Chemical has no effect on the direction of Sempio Foods i.e., Sempio Foods and Korea Petro go up and down completely randomly.
Pair Corralation between Sempio Foods and Korea Petro
Assuming the 90 days trading horizon Sempio Foods Co is expected to generate 0.72 times more return on investment than Korea Petro. However, Sempio Foods Co is 1.39 times less risky than Korea Petro. It trades about -0.25 of its potential returns per unit of risk. Korea Petro Chemical is currently generating about -0.32 per unit of risk. If you would invest 2,910,000 in Sempio Foods Co on August 31, 2024 and sell it today you would lose (285,000) from holding Sempio Foods Co or give up 9.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sempio Foods Co vs. Korea Petro Chemical
Performance |
| Timeline |
| Sempio Foods |
| Korea Petro Chemical |
Sempio Foods and Korea Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sempio Foods and Korea Petro
The main advantage of trading using opposite Sempio Foods and Korea Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempio Foods position performs unexpectedly, Korea Petro 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 Korea Petro will offset losses from the drop in Korea Petro's long position.| Sempio Foods vs. Cots Technology Co | Sempio Foods vs. Taeyang Metal Industrial | Sempio Foods vs. Hanjoo Light Metal | Sempio Foods vs. Amogreentech Co |
| Korea Petro vs. LG Chemicals | Korea Petro vs. POSCO Holdings | Korea Petro vs. Hanwha Solutions | Korea Petro vs. Lotte Chemical 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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