Correlation Between Dongbu Insurance and FOODWELL

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

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

Diversification Opportunities for Dongbu Insurance and FOODWELL

-0.18

Correlation Coefficient

Dongbu Insurance  FOODWELL

Good diversification

The 3 months correlation between Dongbu and FOODWELL is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and FOODWELL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOODWELL and Dongbu Insurance 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 Dongbu Insurance Co are associated (or correlated) with FOODWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOODWELL has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and FOODWELL go up and down completely randomly.

Pair Corralation between Dongbu Insurance and FOODWELL

Assuming the 90 days trading horizon Dongbu Insurance Co is expected to under-perform the FOODWELL. But the stock apears to be less risky and, when comparing its historical volatility, Dongbu Insurance Co is 1.28 times less risky than FOODWELL. The stock trades about -0.11 of its potential returns per unit of risk. The FOODWELL Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  492,176  in FOODWELL Co on December 2, 2024 and sell it today you would earn a total of  5,324  from holding FOODWELL Co or generate 1.08% return on investment over 90 days.

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

Dongbu Insurance Co  vs.  FOODWELL Co

Dongbu Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dongbu Insurance Co 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

FOODWELL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FOODWELL Co are ranked lower than 1 (%) 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.

Pair Trading with Dongbu Insurance and FOODWELL

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

The idea behind Dongbu Insurance Co and FOODWELL 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.