Correlation Between Life Insurance and Styrenix Performance

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

By analyzing existing cross correlation between Life Insurance and Styrenix Performance Materials, you can compare the effects of market volatilities on Life Insurance and Styrenix Performance 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 Styrenix Performance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Insurance and Styrenix Performance.

Diversification Opportunities for Life Insurance and Styrenix Performance

0.4

Correlation Coefficient

Life Insurance  Styrenix Performance

Very weak diversification

The 3 months correlation between Life and Styrenix is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance and Styrenix Performance Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Styrenix Performance 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 Styrenix Performance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Styrenix Performance has no effect on the direction of Life Insurance i.e., Life Insurance and Styrenix Performance go up and down completely randomly.

Pair Corralation between Life Insurance and Styrenix Performance

Assuming the 90 days trading horizon Life Insurance is expected to under-perform the Styrenix Performance. But the stock apears to be less risky and, when comparing its historical volatility, Life Insurance is 1.37 times less risky than Styrenix Performance. The stock trades about -0.09 of its potential returns per unit of risk. The Styrenix Performance Materials is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  263,695  in Styrenix Performance Materials on September 5, 2024 and sell it today you would lose (12,345) from holding Styrenix Performance Materials or give up 4.68% of portfolio value over 90 days.

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

Life Insurance  vs.  Styrenix Performance Materials

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.

Styrenix Performance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Styrenix Performance Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Styrenix Performance is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Life Insurance and Styrenix Performance

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

The idea behind Life Insurance and Styrenix Performance Materials 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.