Correlation Between Sempio Foods and SK Chemicals
Can any of the company-specific risk be diversified away by investing in both Sempio Foods and SK Chemicals 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 SK Chemicals 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 SK Chemicals Co, you can compare the effects of market volatilities on Sempio Foods and SK Chemicals 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 SK Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sempio Foods and SK Chemicals.
Diversification Opportunities for Sempio Foods and SK Chemicals
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sempio and 285130 is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sempio Foods Co and SK Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Chemicals 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 SK Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Chemicals has no effect on the direction of Sempio Foods i.e., Sempio Foods and SK Chemicals go up and down completely randomly.
Pair Corralation between Sempio Foods and SK Chemicals
Assuming the 90 days trading horizon Sempio Foods Co is expected to under-perform the SK Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, Sempio Foods Co is 1.02 times less risky than SK Chemicals. The stock trades about -0.12 of its potential returns per unit of risk. The SK Chemicals Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,480,000 in SK Chemicals Co on September 12, 2024 and sell it today you would earn a total of 20,000 from holding SK Chemicals Co or generate 0.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sempio Foods Co vs. SK Chemicals Co
Performance |
| Timeline |
| Sempio Foods |
| SK Chemicals |
Sempio Foods and SK Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sempio Foods and SK Chemicals
The main advantage of trading using opposite Sempio Foods and SK Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempio Foods position performs unexpectedly, SK Chemicals 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 SK Chemicals will offset losses from the drop in SK Chemicals' long position.| Sempio Foods vs. Korea New Network | Sempio Foods vs. ICD Co | Sempio Foods vs. DYPNF CoLtd | Sempio Foods vs. Solution Advanced Technology |
| SK Chemicals vs. LG Chemicals | SK Chemicals vs. POSCO Holdings | SK Chemicals vs. Hanwha Solutions | SK Chemicals 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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