Correlation Between Kmc Properties and Lifecare

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

By analyzing existing cross correlation between Kmc Properties ASA and Lifecare AS, you can compare the effects of market volatilities on Kmc Properties and Lifecare 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 Kmc Properties with a short position of Lifecare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kmc Properties and Lifecare.

Diversification Opportunities for Kmc Properties and Lifecare

0.01

Correlation Coefficient

Kmc Properties  Lifecare

Significant diversification

The 3 months correlation between Kmc and Lifecare is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kmc Properties ASA and Lifecare AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifecare AS and Kmc 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 Kmc Properties ASA are associated (or correlated) with Lifecare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifecare AS has no effect on the direction of Kmc Properties i.e., Kmc Properties and Lifecare go up and down completely randomly.

Pair Corralation between Kmc Properties and Lifecare

Assuming the 90 days trading horizon Kmc Properties ASA is expected to generate 5.18 times more return on investment than Lifecare. However, Kmc Properties is 5.18 times more volatile than Lifecare AS. It trades about 0.12 of its potential returns per unit of risk. Lifecare AS is currently generating about -0.01 per unit of risk. If you would invest  4.80  in Kmc Properties ASA on December 30, 2024 and sell it today you would earn a total of  2.20  from holding Kmc Properties ASA or generate 45.83% return on investment over 90 days.

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

Kmc Properties ASA  vs.  Lifecare AS

Kmc Properties ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kmc Properties ASA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Kmc Properties disclosed solid returns over the last few months and may actually be approaching a breakup point.

Lifecare AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifecare AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Lifecare is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Kmc Properties and Lifecare

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

The idea behind Kmc Properties ASA and Lifecare AS 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.