Correlation Between Moadata and Sempio Foods

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

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

Diversification Opportunities for Moadata and Sempio Foods

0.87

Correlation Coefficient

Moadata  Sempio Foods

Very poor diversification

The 3 months correlation between Moadata and Sempio is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Moadata 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 Moadata 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 Moadata 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 Moadata i.e., Moadata and Sempio Foods go up and down completely randomly.

Pair Corralation between Moadata and Sempio Foods

Assuming the 90 days trading horizon Moadata Co is expected to under-perform the Sempio Foods. In addition to that, Moadata is 1.44 times more volatile than Sempio Foods Co. It trades about -0.05 of its total potential returns per unit of risk. Sempio Foods Co is currently generating about -0.02 per unit of volatility. If you would invest  3,025,000  in Sempio Foods Co on October 9, 2024 and sell it today you would lose (465,000) from holding Sempio Foods Co or give up 15.37% of portfolio value over 90 days.

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

Moadata Co  vs.  Sempio Foods Co

Moadata

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moadata Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Sempio Foods

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Moadata and Sempio Foods

The main advantage of trading using opposite Moadata and Sempio Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moadata 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 Moadata 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.