Correlation Between LIFENET INSURANCE and Fast Retailing

Can any of the company-specific risk be diversified away by investing in both LIFENET INSURANCE and Fast Retailing 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 Fast Retailing 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 Fast Retailing Co, you can compare the effects of market volatilities on LIFENET INSURANCE and Fast Retailing 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 Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFENET INSURANCE and Fast Retailing.

Diversification Opportunities for LIFENET INSURANCE and Fast Retailing

0.0

Correlation Coefficient

LIFENET INSURANCE  Fast Retailing

Pay attention - limited upside

The 3 months correlation between LIFENET and Fast is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE CO and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of LIFENET INSURANCE i.e., LIFENET INSURANCE and Fast Retailing go up and down completely randomly.

Pair Corralation between LIFENET INSURANCE and Fast Retailing

Assuming the 90 days horizon LIFENET INSURANCE CO is expected to generate 1.48 times more return on investment than Fast Retailing. However, LIFENET INSURANCE is 1.48 times more volatile than Fast Retailing Co. It trades about 0.08 of its potential returns per unit of risk. Fast Retailing Co is currently generating about 0.07 per unit of risk. If you would invest  700.00  in LIFENET INSURANCE CO on October 9, 2024 and sell it today you would earn a total of  400.00  from holding LIFENET INSURANCE CO or generate 57.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

LIFENET INSURANCE CO  vs.  Fast Retailing Co

LIFENET INSURANCE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LIFENET INSURANCE CO are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LIFENET INSURANCE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fast Retailing

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fast Retailing Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Fast Retailing is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LIFENET INSURANCE and Fast Retailing

The main advantage of trading using opposite LIFENET INSURANCE and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFENET INSURANCE position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.

The idea behind LIFENET INSURANCE CO and Fast Retailing Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.