Correlation Between Adamjee Insurance and JS Investments

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

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

Diversification Opportunities for Adamjee Insurance and JS Investments

0.19

Correlation Coefficient

Adamjee Insurance  JS Investments

Average diversification

The 3 months correlation between Adamjee and JSIL is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments and Adamjee 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 Adamjee Insurance are associated (or correlated) with JS Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Investments has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and JS Investments go up and down completely randomly.

Pair Corralation between Adamjee Insurance and JS Investments

Assuming the 90 days trading horizon Adamjee Insurance is expected to under-perform the JS Investments. But the stock apears to be less risky and, when comparing its historical volatility, Adamjee Insurance is 2.07 times less risky than JS Investments. The stock trades about -0.28 of its potential returns per unit of risk. The JS Investments is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  2,316  in JS Investments on December 23, 2024 and sell it today you would lose (122.00) from holding JS Investments or give up 5.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Adamjee Insurance  vs.  JS Investments

Adamjee Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adamjee Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Adamjee Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JS Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days JS Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Adamjee Insurance and JS Investments

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

The idea behind Adamjee Insurance and JS Investments 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.