Correlation Between LIFENET INSURANCE and ECHO INVESTMENT
Can any of the company-specific risk be diversified away by investing in both LIFENET INSURANCE and ECHO INVESTMENT 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 LIFENET INSURANCE and ECHO INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFENET INSURANCE CO and ECHO INVESTMENT ZY, you can compare the effects of market volatilities on LIFENET INSURANCE and ECHO INVESTMENT 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 LIFENET INSURANCE with a short position of ECHO INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFENET INSURANCE and ECHO INVESTMENT.
Diversification Opportunities for LIFENET INSURANCE and ECHO INVESTMENT
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LIFENET and ECHO is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE CO and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY and LIFENET 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 LIFENET INSURANCE CO are associated (or correlated) with ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of LIFENET INSURANCE i.e., LIFENET INSURANCE and ECHO INVESTMENT go up and down completely randomly.
Pair Corralation between LIFENET INSURANCE and ECHO INVESTMENT
Assuming the 90 days horizon LIFENET INSURANCE CO is expected to generate 1.37 times more return on investment than ECHO INVESTMENT. However, LIFENET INSURANCE is 1.37 times more volatile than ECHO INVESTMENT ZY. It trades about 0.18 of its potential returns per unit of risk. ECHO INVESTMENT ZY is currently generating about -0.09 per unit of risk. If you would invest 1,100 in LIFENET INSURANCE CO on November 1, 2024 and sell it today you would earn a total of 80.00 from holding LIFENET INSURANCE CO or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFENET INSURANCE CO vs. ECHO INVESTMENT ZY
Performance |
| Timeline |
| LIFENET INSURANCE |
| ECHO INVESTMENT ZY |
LIFENET INSURANCE and ECHO INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFENET INSURANCE and ECHO INVESTMENT
The main advantage of trading using opposite LIFENET INSURANCE and ECHO INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFENET INSURANCE position performs unexpectedly, ECHO INVESTMENT 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 ECHO INVESTMENT will offset losses from the drop in ECHO INVESTMENT's long position.| LIFENET INSURANCE vs. Penta Ocean Construction Co | LIFENET INSURANCE vs. Sumitomo Mitsui Construction | LIFENET INSURANCE vs. Osisko Metals | LIFENET INSURANCE vs. Nippon Light Metal |
| ECHO INVESTMENT vs. Summit Hotel Properties | ECHO INVESTMENT vs. LIFENET INSURANCE CO | ECHO INVESTMENT vs. REVO INSURANCE SPA | ECHO INVESTMENT vs. CHRYSALIS INVESTMENTS LTD |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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