Correlation Between Donegal Investment and Origin Enterprises

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

By analyzing existing cross correlation between Donegal Investment Group and Origin Enterprises Plc, you can compare the effects of market volatilities on Donegal Investment and Origin Enterprises 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 Donegal Investment with a short position of Origin Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Donegal Investment and Origin Enterprises.

Diversification Opportunities for Donegal Investment and Origin Enterprises

0.32

Correlation Coefficient

Donegal Investment  Origin Enterprises

Weak diversification

The 3 months correlation between Donegal and Origin is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Donegal Investment Group and Origin Enterprises Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Enterprises Plc and Donegal Investment 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 Donegal Investment Group are associated (or correlated) with Origin Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Enterprises Plc has no effect on the direction of Donegal Investment i.e., Donegal Investment and Origin Enterprises go up and down completely randomly.

Pair Corralation between Donegal Investment and Origin Enterprises

Assuming the 90 days trading horizon Donegal Investment Group is expected to generate 59.4 times more return on investment than Origin Enterprises. However, Donegal Investment is 59.4 times more volatile than Origin Enterprises Plc. It trades about 0.11 of its potential returns per unit of risk. Origin Enterprises Plc is currently generating about 0.1 per unit of risk. If you would invest  1,660  in Donegal Investment Group on December 30, 2024 and sell it today you would lose (10.00) from holding Donegal Investment Group or give up 0.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Donegal Investment Group  vs.  Origin Enterprises Plc

Donegal Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Donegal Investment Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Donegal Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Origin Enterprises Plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Enterprises Plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Origin Enterprises reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Donegal Investment and Origin Enterprises

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

The idea behind Donegal Investment Group and Origin Enterprises Plc 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.