Correlation Between Seach Medical and Millennium Food

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

By analyzing existing cross correlation between Seach Medical Group and Millennium Food Tech LP, you can compare the effects of market volatilities on Seach Medical and Millennium Food 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 Seach Medical with a short position of Millennium Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seach Medical and Millennium Food.

Diversification Opportunities for Seach Medical and Millennium Food

-0.39

Correlation Coefficient

Seach Medical  Millennium Food

Very good diversification

The 3 months correlation between Seach and Millennium is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Seach Medical Group and Millennium Food Tech LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millennium Food Tech and Seach Medical 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 Seach Medical Group are associated (or correlated) with Millennium Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millennium Food Tech has no effect on the direction of Seach Medical i.e., Seach Medical and Millennium Food go up and down completely randomly.

Pair Corralation between Seach Medical and Millennium Food

Assuming the 90 days trading horizon Seach Medical Group is expected to generate 0.68 times more return on investment than Millennium Food. However, Seach Medical Group is 1.48 times less risky than Millennium Food. It trades about 0.29 of its potential returns per unit of risk. Millennium Food Tech LP is currently generating about -0.01 per unit of risk. If you would invest  22,830  in Seach Medical Group on October 26, 2024 and sell it today you would earn a total of  9,170  from holding Seach Medical Group or generate 40.17% return on investment over 90 days.

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

Seach Medical Group  vs.  Millennium Food Tech LP

Seach Medical Group

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Seach Medical Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Seach Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Millennium Food Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Seach Medical and Millennium Food

The main advantage of trading using opposite Seach Medical and Millennium Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seach Medical position performs unexpectedly, Millennium Food 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 Millennium Food will offset losses from the drop in Millennium Food's long position.

The idea behind Seach Medical Group and Millennium Food Tech LP 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.