Correlation Between FOODWELL and Samsung Life

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

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

Diversification Opportunities for FOODWELL and Samsung Life

0.15

Correlation Coefficient

FOODWELL  Samsung Life

Average diversification

The 3 months correlation between FOODWELL and Samsung is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding FOODWELL Co and Samsung Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life Insurance and FOODWELL 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 FOODWELL Co are associated (or correlated) with Samsung Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Life Insurance has no effect on the direction of FOODWELL i.e., FOODWELL and Samsung Life go up and down completely randomly.

Pair Corralation between FOODWELL and Samsung Life

Assuming the 90 days trading horizon FOODWELL is expected to generate 3.23 times less return on investment than Samsung Life. But when comparing it to its historical volatility, FOODWELL Co is 1.47 times less risky than Samsung Life. It trades about 0.04 of its potential returns per unit of risk. Samsung Life Insurance is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  9,810,000  in Samsung Life Insurance on September 5, 2024 and sell it today you would earn a total of  1,090,000  from holding Samsung Life Insurance or generate 11.11% return on investment over 90 days.

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

FOODWELL Co  vs.  Samsung Life Insurance

FOODWELL

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FOODWELL Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, FOODWELL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Samsung Life Insurance

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with FOODWELL and Samsung Life

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

The idea behind FOODWELL Co and Samsung Life Insurance 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.