Correlation Between KRISPY KREME and LIFENET INSURANCE

Can any of the company-specific risk be diversified away by investing in both KRISPY KREME and LIFENET INSURANCE 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 KRISPY KREME and LIFENET INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KRISPY KREME DL 01 and LIFENET INSURANCE CO, you can compare the effects of market volatilities on KRISPY KREME and LIFENET INSURANCE 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 KRISPY KREME with a short position of LIFENET INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and LIFENET INSURANCE.

Diversification Opportunities for KRISPY KREME and LIFENET INSURANCE

0.0

Correlation Coefficient

KRISPY KREME  LIFENET INSURANCE

Pay attention - limited upside

The 3 months correlation between KRISPY and LIFENET is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE and KRISPY KREME 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 KRISPY KREME DL 01 are associated (or correlated) with LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of KRISPY KREME i.e., KRISPY KREME and LIFENET INSURANCE go up and down completely randomly.

Pair Corralation between KRISPY KREME and LIFENET INSURANCE

If you would invest  0.00  in KRISPY KREME DL 01 on December 27, 2024 and sell it today you would earn a total of  0.00  from holding KRISPY KREME DL 01 or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

KRISPY KREME DL 01  vs.  LIFENET INSURANCE CO

KRISPY KREME DL

Risk-Adjusted Performance

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, KRISPY KREME is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with KRISPY KREME and LIFENET INSURANCE

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

The idea behind KRISPY KREME DL 01 and LIFENET INSURANCE 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.