Correlation Between LIFENET INSURANCE and MULTI CHEM
Can any of the company-specific risk be diversified away by investing in both LIFENET INSURANCE and MULTI CHEM 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 MULTI CHEM 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 MULTI CHEM LTD, you can compare the effects of market volatilities on LIFENET INSURANCE and MULTI CHEM 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 MULTI CHEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFENET INSURANCE and MULTI CHEM.
Diversification Opportunities for LIFENET INSURANCE and MULTI CHEM
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LIFENET and MULTI is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE CO and MULTI CHEM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MULTI CHEM LTD 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 MULTI CHEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MULTI CHEM LTD has no effect on the direction of LIFENET INSURANCE i.e., LIFENET INSURANCE and MULTI CHEM go up and down completely randomly.
Pair Corralation between LIFENET INSURANCE and MULTI CHEM
Assuming the 90 days horizon LIFENET INSURANCE CO is expected to generate 1.05 times more return on investment than MULTI CHEM. However, LIFENET INSURANCE is 1.05 times more volatile than MULTI CHEM LTD. It trades about 0.11 of its potential returns per unit of risk. MULTI CHEM LTD is currently generating about 0.07 per unit of risk. If you would invest 845.00 in LIFENET INSURANCE CO on September 3, 2024 and sell it today you would earn a total of 385.00 from holding LIFENET INSURANCE CO or generate 45.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFENET INSURANCE CO vs. MULTI CHEM LTD
Performance |
| Timeline |
| LIFENET INSURANCE |
| MULTI CHEM LTD |
LIFENET INSURANCE and MULTI CHEM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFENET INSURANCE and MULTI CHEM
The main advantage of trading using opposite LIFENET INSURANCE and MULTI CHEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFENET INSURANCE position performs unexpectedly, MULTI CHEM 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 MULTI CHEM will offset losses from the drop in MULTI CHEM's long position.| LIFENET INSURANCE vs. TOWNSQUARE MEDIA INC | LIFENET INSURANCE vs. ATRESMEDIA | LIFENET INSURANCE vs. PT Global Mediacom | LIFENET INSURANCE vs. Flutter Entertainment PLC |
| MULTI CHEM vs. Goosehead Insurance | MULTI CHEM vs. Lion One Metals | MULTI CHEM vs. LIFENET INSURANCE CO | MULTI CHEM vs. GALENA MINING 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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