Correlation Between CEYLINCO INSURANCE and Jat Holdings

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

By analyzing existing cross correlation between CEYLINCO INSURANCE PLC and Jat Holdings PLC, you can compare the effects of market volatilities on CEYLINCO INSURANCE and Jat 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 CEYLINCO INSURANCE with a short position of Jat Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEYLINCO INSURANCE and Jat Holdings.

Diversification Opportunities for CEYLINCO INSURANCE and Jat Holdings

0.66

Correlation Coefficient

CEYLINCO INSURANCE  Jat Holdings

Poor diversification

The 3 months correlation between CEYLINCO and Jat is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CEYLINCO INSURANCE PLC and Jat Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jat Holdings PLC and CEYLINCO 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 CEYLINCO INSURANCE PLC are associated (or correlated) with Jat Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jat Holdings PLC has no effect on the direction of CEYLINCO INSURANCE i.e., CEYLINCO INSURANCE and Jat Holdings go up and down completely randomly.

Pair Corralation between CEYLINCO INSURANCE and Jat Holdings

Assuming the 90 days trading horizon CEYLINCO INSURANCE is expected to generate 2.06 times less return on investment than Jat Holdings. But when comparing it to its historical volatility, CEYLINCO INSURANCE PLC is 1.3 times less risky than Jat Holdings. It trades about 0.19 of its potential returns per unit of risk. Jat Holdings PLC is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1,640  in Jat Holdings PLC on September 15, 2024 and sell it today you would earn a total of  880.00  from holding Jat Holdings PLC or generate 53.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.67%
Values	Daily Returns

CEYLINCO INSURANCE PLC  vs.  Jat Holdings PLC

CEYLINCO INSURANCE PLC

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CEYLINCO INSURANCE PLC are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CEYLINCO INSURANCE sustained solid returns over the last few months and may actually be approaching a breakup point.

Jat Holdings PLC

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jat Holdings PLC are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jat Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CEYLINCO INSURANCE and Jat Holdings

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

The idea behind CEYLINCO INSURANCE PLC and Jat Holdings PLC 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.