Correlation Between LFM Properties and COL Financial
Can any of the company-specific risk be diversified away by investing in both LFM Properties and COL Financial 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 LFM Properties and COL Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LFM Properties Corp and COL Financial Group, you can compare the effects of market volatilities on LFM Properties and COL Financial 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 LFM Properties with a short position of COL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LFM Properties and COL Financial.
Diversification Opportunities for LFM Properties and COL Financial
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between LFM and COL is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding LFM Properties Corp and COL Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COL Financial Group and LFM Properties 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 LFM Properties Corp are associated (or correlated) with COL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COL Financial Group has no effect on the direction of LFM Properties i.e., LFM Properties and COL Financial go up and down completely randomly.
Pair Corralation between LFM Properties and COL Financial
Assuming the 90 days trading horizon LFM Properties Corp is expected to generate 2.8 times more return on investment than COL Financial. However, LFM Properties is 2.8 times more volatile than COL Financial Group. It trades about -0.01 of its potential returns per unit of risk. COL Financial Group is currently generating about -0.02 per unit of risk. If you would invest 6.00 in LFM Properties Corp on August 29, 2024 and sell it today you would lose (0.40) from holding LFM Properties Corp or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.43% |
| Values | Daily Returns |
LFM Properties Corp vs. COL Financial Group
Performance |
| Timeline |
| LFM Properties Corp |
| COL Financial Group |
LFM Properties and COL Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LFM Properties and COL Financial
The main advantage of trading using opposite LFM Properties and COL Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LFM Properties position performs unexpectedly, COL Financial 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 COL Financial will offset losses from the drop in COL Financial's long position.| LFM Properties vs. Philippine Savings Bank | LFM Properties vs. Metro Retail Stores | LFM Properties vs. Atlas Consolidated Mining | LFM Properties vs. Transpacific Broadband Group |
| COL Financial vs. VistaREIT | COL Financial vs. Bright Kindle Resources | COL Financial vs. Medco Holdings | COL Financial vs. Allhome Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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