Correlation Between Sempio Foods and LIG-ES SPAC

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

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

Diversification Opportunities for Sempio Foods and LIG-ES SPAC

0.83

Correlation Coefficient

Sempio Foods  LIG-ES SPAC

Very poor diversification

The 3 months correlation between Sempio and LIG-ES is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sempio Foods Co and LIG ES SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIG ES SPAC and Sempio Foods 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 Sempio Foods Co are associated (or correlated) with LIG-ES SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIG ES SPAC has no effect on the direction of Sempio Foods i.e., Sempio Foods and LIG-ES SPAC go up and down completely randomly.

Pair Corralation between Sempio Foods and LIG-ES SPAC

Assuming the 90 days trading horizon Sempio Foods Co is expected to generate 0.79 times more return on investment than LIG-ES SPAC. However, Sempio Foods Co is 1.27 times less risky than LIG-ES SPAC. It trades about -0.07 of its potential returns per unit of risk. LIG ES SPAC is currently generating about -0.26 per unit of risk. If you would invest  2,805,000  in Sempio Foods Co on September 13, 2024 and sell it today you would lose (285,000) from holding Sempio Foods Co or give up 10.16% of portfolio value over 90 days.

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

Sempio Foods Co  vs.  LIG ES SPAC

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.

LIG ES SPAC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LIG ES SPAC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sempio Foods and LIG-ES SPAC

The main advantage of trading using opposite Sempio Foods and LIG-ES SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempio Foods position performs unexpectedly, LIG-ES SPAC 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 LIG-ES SPAC will offset losses from the drop in LIG-ES SPAC's long position.

The idea behind Sempio Foods Co and LIG ES SPAC 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..