Correlation Between Kukil Metal and Sempio Foods

Can any of the company-specific risk be diversified away by investing in both Kukil Metal 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 Kukil Metal and Sempio Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kukil Metal Co and Sempio Foods Co, you can compare the effects of market volatilities on Kukil Metal 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 Kukil Metal with a short position of Sempio Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukil Metal and Sempio Foods.

Diversification Opportunities for Kukil Metal and Sempio Foods

-0.4

Correlation Coefficient

Kukil Metal  Sempio Foods

Very good diversification

The 3 months correlation between Kukil and Sempio is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Kukil Metal 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 Kukil Metal 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 Kukil Metal 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 Kukil Metal i.e., Kukil Metal and Sempio Foods go up and down completely randomly.

Pair Corralation between Kukil Metal and Sempio Foods

Assuming the 90 days trading horizon Kukil Metal Co is expected to under-perform the Sempio Foods. But the stock apears to be less risky and, when comparing its historical volatility, Kukil Metal Co is 1.64 times less risky than Sempio Foods. The stock trades about 0.0 of its potential returns per unit of risk. The Sempio Foods Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,495,728  in Sempio Foods Co on December 24, 2024 and sell it today you would earn a total of  139,272  from holding Sempio Foods Co or generate 5.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kukil Metal Co  vs.  Sempio Foods Co

Kukil Metal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kukil Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kukil Metal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sempio Foods

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sempio Foods Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sempio Foods may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kukil Metal and Sempio Foods

The main advantage of trading using opposite Kukil Metal and Sempio Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukil Metal 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.

The idea behind Kukil Metal Co and Sempio Foods Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.