Correlation Between Life Time and Fenbo Holdings

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

By analyzing existing cross correlation between Life Time Group and Fenbo Holdings Limited, you can compare the effects of market volatilities on Life Time and Fenbo Holdings 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 Time with a short position of Fenbo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Fenbo Holdings.

Diversification Opportunities for Life Time and Fenbo Holdings

-0.6

Correlation Coefficient

Life Time  Fenbo Holdings

Excellent diversification

The 3 months correlation between Life and Fenbo is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Fenbo Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fenbo Holdings and Life Time 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 Time Group are associated (or correlated) with Fenbo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fenbo Holdings has no effect on the direction of Life Time i.e., Life Time and Fenbo Holdings go up and down completely randomly.

Pair Corralation between Life Time and Fenbo Holdings

Considering the 90-day investment horizon Life Time Group is expected to generate 0.36 times more return on investment than Fenbo Holdings. However, Life Time Group is 2.81 times less risky than Fenbo Holdings. It trades about 0.25 of its potential returns per unit of risk. Fenbo Holdings Limited is currently generating about 0.02 per unit of risk. If you would invest  2,206  in Life Time Group on December 18, 2024 and sell it today you would earn a total of  827.00  from holding Life Time Group or generate 37.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Life Time Group  vs.  Fenbo Holdings Limited

Life Time Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Life Time Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Life Time demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Fenbo Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fenbo Holdings Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, Fenbo Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Life Time and Fenbo Holdings

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

The idea behind Life Time Group and Fenbo Holdings Limited 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.