Correlation Between LIFENET INSURANCE and Theralase Technologies
Can any of the company-specific risk be diversified away by investing in both LIFENET INSURANCE and Theralase Technologies 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 Theralase Technologies 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 Theralase Technologies, you can compare the effects of market volatilities on LIFENET INSURANCE and Theralase Technologies 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 Theralase Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFENET INSURANCE and Theralase Technologies.
Diversification Opportunities for LIFENET INSURANCE and Theralase Technologies
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LIFENET and Theralase is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE CO and Theralase Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theralase Technologies 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 Theralase Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theralase Technologies has no effect on the direction of LIFENET INSURANCE i.e., LIFENET INSURANCE and Theralase Technologies go up and down completely randomly.
Pair Corralation between LIFENET INSURANCE and Theralase Technologies
Assuming the 90 days horizon LIFENET INSURANCE is expected to generate 1.5 times less return on investment than Theralase Technologies. But when comparing it to its historical volatility, LIFENET INSURANCE CO is 3.69 times less risky than Theralase Technologies. It trades about 0.18 of its potential returns per unit of risk. Theralase Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Theralase Technologies on August 27, 2024 and sell it today you would earn a total of 1.00 from holding Theralase Technologies or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFENET INSURANCE CO vs. Theralase Technologies
Performance |
| Timeline |
| LIFENET INSURANCE |
| Theralase Technologies |
LIFENET INSURANCE and Theralase Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFENET INSURANCE and Theralase Technologies
The main advantage of trading using opposite LIFENET INSURANCE and Theralase Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFENET INSURANCE position performs unexpectedly, Theralase Technologies 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 Theralase Technologies will offset losses from the drop in Theralase Technologies' long position.| LIFENET INSURANCE vs. Lyxor 1 | LIFENET INSURANCE vs. Xtrackers ShortDAX | LIFENET INSURANCE vs. Xtrackers LevDAX |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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