Correlation Between Jeju Beer and FOODWELL

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

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

Diversification Opportunities for Jeju Beer and FOODWELL

0.25

Correlation Coefficient

Jeju Beer  FOODWELL

Modest diversification

The 3 months correlation between Jeju and FOODWELL is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Beer Co and FOODWELL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOODWELL and Jeju Beer 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 Jeju Beer 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 Jeju Beer i.e., Jeju Beer and FOODWELL go up and down completely randomly.

Pair Corralation between Jeju Beer and FOODWELL

Assuming the 90 days trading horizon Jeju Beer Co is expected to under-perform the FOODWELL. In addition to that, Jeju Beer is 1.01 times more volatile than FOODWELL Co. It trades about -0.2 of its total potential returns per unit of risk. FOODWELL Co is currently generating about 0.01 per unit of volatility. If you would invest  502,000  in FOODWELL Co on December 25, 2024 and sell it today you would lose (4,000) from holding FOODWELL Co or give up 0.8% of portfolio value over 90 days.

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

Jeju Beer Co  vs.  FOODWELL Co

Jeju Beer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jeju Beer 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

Very Weak

Over the last 90 days FOODWELL Co has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Jeju Beer and FOODWELL

The main advantage of trading using opposite Jeju Beer and FOODWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Beer 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 Jeju Beer 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .