Correlation Between CUSTODIAN INVESTMENT and JAIZ BANK

Can any of the company-specific risk be diversified away by investing in both CUSTODIAN INVESTMENT and JAIZ BANK 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 CUSTODIAN INVESTMENT and JAIZ BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for CUSTODIAN INVESTMENT and JAIZ BANK

0.9

Correlation Coefficient

CUSTODIAN INVESTMENT  JAIZ BANK

Almost no diversification

The 3 months correlation between CUSTODIAN and JAIZ is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding CUSTODIAN INVESTMENT PLC and JAIZ BANK PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAIZ BANK PLC and CUSTODIAN INVESTMENT 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 CUSTODIAN INVESTMENT PLC are associated (or correlated) with JAIZ BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAIZ BANK PLC has no effect on the direction of CUSTODIAN INVESTMENT i.e., CUSTODIAN INVESTMENT and JAIZ BANK go up and down completely randomly.

Pair Corralation between CUSTODIAN INVESTMENT and JAIZ BANK

Assuming the 90 days trading horizon CUSTODIAN INVESTMENT is expected to generate 1.03 times less return on investment than JAIZ BANK. In addition to that, CUSTODIAN INVESTMENT is 1.04 times more volatile than JAIZ BANK PLC. It trades about 0.26 of its total potential returns per unit of risk. JAIZ BANK PLC is currently generating about 0.28 per unit of volatility. If you would invest  238.00  in JAIZ BANK PLC on December 4, 2024 and sell it today you would earn a total of  127.00  from holding JAIZ BANK PLC or generate 53.36% return on investment over 90 days.

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

CUSTODIAN INVESTMENT PLC  vs.  JAIZ BANK PLC

CUSTODIAN INVESTMENT PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CUSTODIAN INVESTMENT PLC are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, CUSTODIAN INVESTMENT demonstrated solid returns over the last few months and may actually be approaching a breakup point.

JAIZ BANK PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JAIZ BANK PLC are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, JAIZ BANK displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CUSTODIAN INVESTMENT and JAIZ BANK

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

The idea behind CUSTODIAN INVESTMENT PLC and JAIZ BANK 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.