Correlation Between Crescent Star and Jubilee Life

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

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

Diversification Opportunities for Crescent Star and Jubilee Life

0.69

Correlation Coefficient

Crescent Star  Jubilee Life

Poor diversification

The 3 months correlation between Crescent and Jubilee is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Star Insurance and Jubilee Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jubilee Life Insurance and Crescent Star 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 Crescent Star Insurance are associated (or correlated) with Jubilee Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jubilee Life Insurance has no effect on the direction of Crescent Star i.e., Crescent Star and Jubilee Life go up and down completely randomly.

Pair Corralation between Crescent Star and Jubilee Life

Assuming the 90 days trading horizon Crescent Star is expected to generate 7.14 times less return on investment than Jubilee Life. In addition to that, Crescent Star is 1.1 times more volatile than Jubilee Life Insurance. It trades about 0.02 of its total potential returns per unit of risk. Jubilee Life Insurance is currently generating about 0.19 per unit of volatility. If you would invest  12,293  in Jubilee Life Insurance on September 28, 2024 and sell it today you would earn a total of  4,883  from holding Jubilee Life Insurance or generate 39.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Crescent Star Insurance  vs.  Jubilee Life Insurance

Crescent Star Insurance

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crescent Star Insurance are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Crescent Star is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jubilee Life Insurance

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jubilee Life Insurance are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Jubilee Life disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crescent Star and Jubilee Life

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

The idea behind Crescent Star Insurance and Jubilee Life Insurance 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.