Correlation Between Life Insurance and Byke Hospitality

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

By analyzing existing cross correlation between Life Insurance and The Byke Hospitality, you can compare the effects of market volatilities on Life Insurance and Byke Hospitality 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 Life Insurance with a short position of Byke Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Insurance and Byke Hospitality.

Diversification Opportunities for Life Insurance and Byke Hospitality

0.25

Correlation Coefficient

Life Insurance  Byke Hospitality

Modest diversification

The 3 months correlation between Life and Byke is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance and The Byke Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byke Hospitality and Life 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 Life Insurance are associated (or correlated) with Byke Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byke Hospitality has no effect on the direction of Life Insurance i.e., Life Insurance and Byke Hospitality go up and down completely randomly.

Pair Corralation between Life Insurance and Byke Hospitality

Assuming the 90 days trading horizon Life Insurance is expected to generate 0.82 times more return on investment than Byke Hospitality. However, Life Insurance is 1.23 times less risky than Byke Hospitality. It trades about 0.05 of its potential returns per unit of risk. The Byke Hospitality is currently generating about 0.04 per unit of risk. If you would invest  76,384  in Life Insurance on September 4, 2024 and sell it today you would earn a total of  20,591  from holding Life Insurance or generate 26.96% return on investment over 90 days.

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

Life Insurance  vs.  The Byke Hospitality

Life Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Byke Hospitality

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Byke Hospitality are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Byke Hospitality is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Life Insurance and Byke Hospitality

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

The idea behind Life Insurance and The Byke Hospitality 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 Anywhere module to track or share privately all of your investments from the convenience of any device.