Correlation Between LFM Properties and National Reinsurance
Can any of the company-specific risk be diversified away by investing in both LFM Properties and National Reinsurance 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 National Reinsurance 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 National Reinsurance, you can compare the effects of market volatilities on LFM Properties and National Reinsurance 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 National Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of LFM Properties and National Reinsurance.
Diversification Opportunities for LFM Properties and National Reinsurance
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LFM and National is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding LFM Properties Corp and National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Reinsurance 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 National Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Reinsurance has no effect on the direction of LFM Properties i.e., LFM Properties and National Reinsurance go up and down completely randomly.
Pair Corralation between LFM Properties and National Reinsurance
Assuming the 90 days trading horizon LFM Properties Corp is expected to generate 1.63 times more return on investment than National Reinsurance. However, LFM Properties is 1.63 times more volatile than National Reinsurance. It trades about 0.01 of its potential returns per unit of risk. National Reinsurance is currently generating about -0.51 per unit of risk. If you would invest 5.70 in LFM Properties Corp on August 29, 2024 and sell it today you would lose (0.10) from holding LFM Properties Corp or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 60.0% |
| Values | Daily Returns |
LFM Properties Corp vs. National Reinsurance
Performance |
| Timeline |
| LFM Properties Corp |
| National Reinsurance |
LFM Properties and National Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LFM Properties and National Reinsurance
The main advantage of trading using opposite LFM Properties and National Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LFM Properties position performs unexpectedly, National Reinsurance 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 National Reinsurance will offset losses from the drop in National Reinsurance'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 |
| National Reinsurance vs. Manulife Financial Corp | National Reinsurance vs. Sun Life Financial | National Reinsurance vs. Allhome Corp | National Reinsurance vs. Jollibee Foods 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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