Correlation Between Sempio Foods and Digital Power
Can any of the company-specific risk be diversified away by investing in both Sempio Foods and Digital Power 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 Digital Power 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 Digital Power Communications, you can compare the effects of market volatilities on Sempio Foods and Digital Power 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 Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sempio Foods and Digital Power.
Diversification Opportunities for Sempio Foods and Digital Power
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sempio and Digital is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sempio Foods Co and Digital Power Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Power Commun 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 Digital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Power Commun has no effect on the direction of Sempio Foods i.e., Sempio Foods and Digital Power go up and down completely randomly.
Pair Corralation between Sempio Foods and Digital Power
Assuming the 90 days trading horizon Sempio Foods Co is expected to under-perform the Digital Power. In addition to that, Sempio Foods is 1.35 times more volatile than Digital Power Communications. It trades about -0.04 of its total potential returns per unit of risk. Digital Power Communications is currently generating about 0.26 per unit of volatility. If you would invest 783,000 in Digital Power Communications on September 26, 2024 and sell it today you would earn a total of 102,000 from holding Digital Power Communications or generate 13.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sempio Foods Co vs. Digital Power Communications
Performance |
| Timeline |
| Sempio Foods |
| Digital Power Commun |
Sempio Foods and Digital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sempio Foods and Digital Power
The main advantage of trading using opposite Sempio Foods and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempio Foods position performs unexpectedly, Digital Power 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 Digital Power will offset losses from the drop in Digital Power's long position.| Sempio Foods vs. SEOJEON ELECTRIC MACHINERY | Sempio Foods vs. Keyang Electric Machinery | Sempio Foods vs. Seoam Machinery Industry | Sempio Foods vs. KakaoBank Corp |
| Digital Power vs. Seoul Semiconductor Co | Digital Power vs. Dongbang Transport Logistics | Digital Power vs. Hanjin Transportation Co | Digital Power vs. Atinum Investment 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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