Correlation Between LTC Properties and PARKWAY LIFE

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

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

Diversification Opportunities for LTC Properties and PARKWAY LIFE

-0.25

Correlation Coefficient

LTC Properties  PARKWAY LIFE

Very good diversification

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

Pair Corralation between LTC Properties and PARKWAY LIFE

Assuming the 90 days horizon LTC Properties is expected to generate 33.54 times less return on investment than PARKWAY LIFE. But when comparing it to its historical volatility, LTC Properties is 1.84 times less risky than PARKWAY LIFE. It trades about 0.0 of its potential returns per unit of risk. PARKWAY LIFE REAL is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  255.00  in PARKWAY LIFE REAL on December 26, 2024 and sell it today you would earn a total of  24.00  from holding PARKWAY LIFE REAL or generate 9.41% return on investment over 90 days.

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

LTC Properties  vs.  PARKWAY LIFE REAL

LTC Properties

Risk-Adjusted Performance

Very Weak

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

PARKWAY LIFE REAL

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PARKWAY LIFE REAL are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PARKWAY LIFE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with LTC Properties and PARKWAY LIFE

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

The idea behind LTC Properties and PARKWAY LIFE REAL 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.