Correlation Between LIFENET INSURANCE and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both LIFENET INSURANCE and Geely Automobile 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 Geely Automobile 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 Geely Automobile Holdings, you can compare the effects of market volatilities on LIFENET INSURANCE and Geely Automobile 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 Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFENET INSURANCE and Geely Automobile.
Diversification Opportunities for LIFENET INSURANCE and Geely Automobile
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LIFENET and Geely is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE CO and Geely Automobile Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geely Automobile Holdings 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 Geely Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geely Automobile Holdings has no effect on the direction of LIFENET INSURANCE i.e., LIFENET INSURANCE and Geely Automobile go up and down completely randomly.
Pair Corralation between LIFENET INSURANCE and Geely Automobile
Assuming the 90 days horizon LIFENET INSURANCE CO is expected to generate 0.46 times more return on investment than Geely Automobile. However, LIFENET INSURANCE CO is 2.15 times less risky than Geely Automobile. It trades about 0.24 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.01 per unit of risk. If you would invest 1,110 in LIFENET INSURANCE CO on August 25, 2024 and sell it today you would earn a total of 100.00 from holding LIFENET INSURANCE CO or generate 9.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFENET INSURANCE CO vs. Geely Automobile Holdings
Performance |
| Timeline |
| LIFENET INSURANCE |
| Geely Automobile Holdings |
LIFENET INSURANCE and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFENET INSURANCE and Geely Automobile
The main advantage of trading using opposite LIFENET INSURANCE and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFENET INSURANCE position performs unexpectedly, Geely Automobile 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 Geely Automobile will offset losses from the drop in Geely Automobile's long position.| LIFENET INSURANCE vs. Lyxor 1 | LIFENET INSURANCE vs. Xtrackers ShortDAX | LIFENET INSURANCE vs. Xtrackers LevDAX |
| Geely Automobile vs. Tesla Inc | Geely Automobile vs. BYD Company Limited | Geely Automobile vs. Superior Plus Corp | Geely Automobile vs. NMI Holdings |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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