Correlation Between Lifecare and Kmc Properties

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

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

Diversification Opportunities for Lifecare and Kmc Properties

0.01

Correlation Coefficient

Lifecare  Kmc Properties

Significant diversification

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

Pair Corralation between Lifecare and Kmc Properties

Assuming the 90 days trading horizon Lifecare AS is expected to under-perform the Kmc Properties. But the stock apears to be less risky and, when comparing its historical volatility, Lifecare AS is 5.18 times less risky than Kmc Properties. The stock trades about -0.01 of its potential returns per unit of risk. The Kmc Properties ASA is currently generating about 0.12 of returns per unit of risk over similar time horizon. 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

Lifecare AS  vs.  Kmc Properties ASA

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.

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.

Pair Trading with Lifecare and Kmc Properties

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

The idea behind Lifecare AS and Kmc Properties ASA 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.