Correlation Between LIFENET INSURANCE and Mitsubishi Estate

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

Diversification Opportunities for LIFENET INSURANCE and Mitsubishi Estate

-0.81

Correlation Coefficient

LIFENET INSURANCE  Mitsubishi Estate

Pay attention - limited upside

The 3 months correlation between LIFENET and Mitsubishi is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE CO and Mitsubishi Estate Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Estate 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 Mitsubishi Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Estate has no effect on the direction of LIFENET INSURANCE i.e., LIFENET INSURANCE and Mitsubishi Estate go up and down completely randomly.

Pair Corralation between LIFENET INSURANCE and Mitsubishi Estate

Assuming the 90 days horizon LIFENET INSURANCE CO is expected to generate 1.41 times more return on investment than Mitsubishi Estate. However, LIFENET INSURANCE is 1.41 times more volatile than Mitsubishi Estate Co. It trades about 0.14 of its potential returns per unit of risk. Mitsubishi Estate Co is currently generating about -0.05 per unit of risk. If you would invest  1,020  in LIFENET INSURANCE CO on September 5, 2024 and sell it today you would earn a total of  220.00  from holding LIFENET INSURANCE CO or generate 21.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

LIFENET INSURANCE CO  vs.  Mitsubishi Estate Co

LIFENET INSURANCE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LIFENET INSURANCE CO are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, LIFENET INSURANCE reported solid returns over the last few months and may actually be approaching a breakup point.

Mitsubishi Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsubishi Estate Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Mitsubishi Estate is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LIFENET INSURANCE and Mitsubishi Estate

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

The idea behind LIFENET INSURANCE CO and Mitsubishi Estate 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.