Correlation Between LIFENET INSURANCE and UPDATE SOFTWARE

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

Diversification Opportunities for LIFENET INSURANCE and UPDATE SOFTWARE

0.23

Correlation Coefficient

LIFENET INSURANCE  UPDATE SOFTWARE

Modest diversification

The 3 months correlation between LIFENET and UPDATE is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE CO and UPDATE SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPDATE SOFTWARE 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 UPDATE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPDATE SOFTWARE has no effect on the direction of LIFENET INSURANCE i.e., LIFENET INSURANCE and UPDATE SOFTWARE go up and down completely randomly.

Pair Corralation between LIFENET INSURANCE and UPDATE SOFTWARE

Assuming the 90 days horizon LIFENET INSURANCE CO is expected to under-perform the UPDATE SOFTWARE. But the stock apears to be less risky and, when comparing its historical volatility, LIFENET INSURANCE CO is 2.22 times less risky than UPDATE SOFTWARE. The stock trades about -0.52 of its potential returns per unit of risk. The UPDATE SOFTWARE is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,498  in UPDATE SOFTWARE on December 2, 2024 and sell it today you would earn a total of  8.00  from holding UPDATE SOFTWARE or generate 0.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

LIFENET INSURANCE CO  vs.  UPDATE SOFTWARE

LIFENET INSURANCE

Risk-Adjusted Performance

Very Weak

Over the last 90 days LIFENET INSURANCE CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

UPDATE SOFTWARE

Risk-Adjusted Performance

Very Weak

Over the last 90 days UPDATE SOFTWARE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with LIFENET INSURANCE and UPDATE SOFTWARE

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

The idea behind LIFENET INSURANCE CO and UPDATE SOFTWARE 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 Global Correlations module to find global opportunities by holding instruments from different markets.