Correlation Between SK Chemicals and Sempio Foods
Can any of the company-specific risk be diversified away by investing in both SK Chemicals and Sempio Foods 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 SK Chemicals and Sempio Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Chemicals Co and Sempio Foods Co, you can compare the effects of market volatilities on SK Chemicals and Sempio Foods 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 SK Chemicals with a short position of Sempio Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Chemicals and Sempio Foods.
Diversification Opportunities for SK Chemicals and Sempio Foods
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 285130 and Sempio is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SK Chemicals Co and Sempio Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempio Foods and SK Chemicals 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 SK Chemicals Co are associated (or correlated) with Sempio Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sempio Foods has no effect on the direction of SK Chemicals i.e., SK Chemicals and Sempio Foods go up and down completely randomly.
Pair Corralation between SK Chemicals and Sempio Foods
Assuming the 90 days trading horizon SK Chemicals Co is expected to generate 1.02 times more return on investment than Sempio Foods. However, SK Chemicals is 1.02 times more volatile than Sempio Foods Co. It trades about 0.02 of its potential returns per unit of risk. Sempio Foods Co is currently generating about -0.12 per unit of risk. 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 |
SK Chemicals Co vs. Sempio Foods Co
Performance |
| Timeline |
| SK Chemicals |
| Sempio Foods |
SK Chemicals and Sempio Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Chemicals and Sempio Foods
The main advantage of trading using opposite SK Chemicals and Sempio Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Chemicals position performs unexpectedly, Sempio Foods 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 Sempio Foods will offset losses from the drop in Sempio Foods' long position.| SK Chemicals vs. LG Chemicals | SK Chemicals vs. POSCO Holdings | SK Chemicals vs. Hanwha Solutions | SK Chemicals vs. Lotte Chemical Corp |
| Sempio Foods vs. Korea New Network | Sempio Foods vs. ICD Co | Sempio Foods vs. DYPNF CoLtd | Sempio Foods vs. Solution Advanced Technology |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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