Correlation Between Sempio Foods and HANA Micron
Can any of the company-specific risk be diversified away by investing in both Sempio Foods and HANA Micron 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 HANA Micron 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 HANA Micron, you can compare the effects of market volatilities on Sempio Foods and HANA Micron 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 HANA Micron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sempio Foods and HANA Micron.
Diversification Opportunities for Sempio Foods and HANA Micron
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sempio and HANA is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sempio Foods Co and HANA Micron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANA Micron 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 HANA Micron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANA Micron has no effect on the direction of Sempio Foods i.e., Sempio Foods and HANA Micron go up and down completely randomly.
Pair Corralation between Sempio Foods and HANA Micron
Assuming the 90 days trading horizon Sempio Foods Co is expected to under-perform the HANA Micron. But the stock apears to be less risky and, when comparing its historical volatility, Sempio Foods Co is 1.34 times less risky than HANA Micron. The stock trades about -0.01 of its potential returns per unit of risk. The HANA Micron is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 890,505 in HANA Micron on September 12, 2024 and sell it today you would lose (13,505) from holding HANA Micron or give up 1.52% 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. HANA Micron
Performance |
| Timeline |
| Sempio Foods |
| HANA Micron |
Sempio Foods and HANA Micron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sempio Foods and HANA Micron
The main advantage of trading using opposite Sempio Foods and HANA Micron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempio Foods position performs unexpectedly, HANA Micron 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 HANA Micron will offset losses from the drop in HANA Micron's long position.| Sempio Foods vs. Korea New Network | Sempio Foods vs. ICD Co | Sempio Foods vs. DYPNF CoLtd | Sempio Foods vs. Solution Advanced Technology |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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