Correlation Between Infinitt Healthcare and Sempio Foods

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

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

Diversification Opportunities for Infinitt Healthcare and Sempio Foods

0.71

Correlation Coefficient

Infinitt Healthcare  Sempio Foods

Poor diversification

The 3 months correlation between Infinitt and Sempio is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Infinitt Healthcare 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 Infinitt Healthcare 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 Infinitt Healthcare 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 Infinitt Healthcare i.e., Infinitt Healthcare and Sempio Foods go up and down completely randomly.

Pair Corralation between Infinitt Healthcare and Sempio Foods

Assuming the 90 days trading horizon Infinitt Healthcare Co is expected to generate 2.64 times more return on investment than Sempio Foods. However, Infinitt Healthcare is 2.64 times more volatile than Sempio Foods Co. It trades about 0.08 of its potential returns per unit of risk. Sempio Foods Co is currently generating about 0.0 per unit of risk. If you would invest  420,000  in Infinitt Healthcare Co on December 26, 2024 and sell it today you would earn a total of  77,000  from holding Infinitt Healthcare Co or generate 18.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Infinitt Healthcare Co  vs.  Sempio Foods Co

Infinitt Healthcare

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Infinitt Healthcare Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Infinitt Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Sempio Foods

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Infinitt Healthcare and Sempio Foods

The main advantage of trading using opposite Infinitt Healthcare and Sempio Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infinitt Healthcare 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 Infinitt Healthcare 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.