Correlation Between PT Global and LIFENET INSURANCE
Can any of the company-specific risk be diversified away by investing in both PT Global and LIFENET INSURANCE 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 PT Global and LIFENET INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Global Mediacom and LIFENET INSURANCE CO, you can compare the effects of market volatilities on PT Global and LIFENET INSURANCE 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 PT Global with a short position of LIFENET INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Global and LIFENET INSURANCE.
Diversification Opportunities for PT Global and LIFENET INSURANCE
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 06L and LIFENET is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding PT Global Mediacom and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE and PT Global 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 PT Global Mediacom are associated (or correlated) with LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of PT Global i.e., PT Global and LIFENET INSURANCE go up and down completely randomly.
Pair Corralation between PT Global and LIFENET INSURANCE
Assuming the 90 days trading horizon PT Global Mediacom is expected to under-perform the LIFENET INSURANCE. But the stock apears to be less risky and, when comparing its historical volatility, PT Global Mediacom is 1.05 times less risky than LIFENET INSURANCE. The stock trades about -0.03 of its potential returns per unit of risk. The LIFENET INSURANCE CO is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,050 in LIFENET INSURANCE CO on September 3, 2024 and sell it today you would earn a total of 180.00 from holding LIFENET INSURANCE CO or generate 17.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Global Mediacom vs. LIFENET INSURANCE CO
Performance |
| Timeline |
| PT Global Mediacom |
| LIFENET INSURANCE |
PT Global and LIFENET INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Global and LIFENET INSURANCE
The main advantage of trading using opposite PT Global and LIFENET INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Global position performs unexpectedly, LIFENET INSURANCE 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 LIFENET INSURANCE will offset losses from the drop in LIFENET INSURANCE's long position.The idea behind PT Global Mediacom and LIFENET INSURANCE 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.| LIFENET INSURANCE vs. TOWNSQUARE MEDIA INC | LIFENET INSURANCE vs. ATRESMEDIA | LIFENET INSURANCE vs. PT Global Mediacom | LIFENET INSURANCE vs. Flutter Entertainment PLC |
Check out your portfolio center.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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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