Correlation Between Fauji Fertilizer and Jubilee Life

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

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

Diversification Opportunities for Fauji Fertilizer and Jubilee Life

-0.33

Correlation Coefficient

Fauji Fertilizer  Jubilee Life

Very good diversification

The 3 months correlation between Fauji and Jubilee is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fauji Fertilizer 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 Fauji Fertilizer 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 Fauji Fertilizer 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 Fauji Fertilizer i.e., Fauji Fertilizer and Jubilee Life go up and down completely randomly.

Pair Corralation between Fauji Fertilizer and Jubilee Life

Assuming the 90 days trading horizon Fauji Fertilizer is expected to generate 0.49 times more return on investment than Jubilee Life. However, Fauji Fertilizer is 2.04 times less risky than Jubilee Life. It trades about 0.09 of its potential returns per unit of risk. Jubilee Life Insurance is currently generating about -0.05 per unit of risk. If you would invest  34,706  in Fauji Fertilizer on December 31, 2024 and sell it today you would earn a total of  2,270  from holding Fauji Fertilizer or generate 6.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Fauji Fertilizer  vs.  Jubilee Life Insurance

Fauji Fertilizer

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fauji Fertilizer are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fauji Fertilizer may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Jubilee Life Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jubilee Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Fauji Fertilizer and Jubilee Life

The main advantage of trading using opposite Fauji Fertilizer and Jubilee Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fauji Fertilizer 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 Fauji Fertilizer 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.

Check out your portfolio center.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.