Correlation Between JAIZ BANK and ABBEY MORTGAGE

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

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

Diversification Opportunities for JAIZ BANK and ABBEY MORTGAGE

0.68

Correlation Coefficient

JAIZ BANK  ABBEY MORTGAGE

Poor diversification

The 3 months correlation between JAIZ and ABBEY is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding JAIZ BANK PLC and ABBEY MORTGAGE BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABBEY MORTGAGE BANK and JAIZ BANK 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 JAIZ BANK PLC are associated (or correlated) with ABBEY MORTGAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABBEY MORTGAGE BANK has no effect on the direction of JAIZ BANK i.e., JAIZ BANK and ABBEY MORTGAGE go up and down completely randomly.

Pair Corralation between JAIZ BANK and ABBEY MORTGAGE

Assuming the 90 days trading horizon JAIZ BANK PLC is expected to generate 0.78 times more return on investment than ABBEY MORTGAGE. However, JAIZ BANK PLC is 1.28 times less risky than ABBEY MORTGAGE. It trades about 0.1 of its potential returns per unit of risk. ABBEY MORTGAGE BANK is currently generating about 0.0 per unit of risk. If you would invest  259.00  in JAIZ BANK PLC on October 26, 2024 and sell it today you would earn a total of  41.00  from holding JAIZ BANK PLC or generate 15.83% return on investment over 90 days.

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

JAIZ BANK PLC  vs.  ABBEY MORTGAGE BANK

JAIZ BANK PLC

Risk-Adjusted Performance

7 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JAIZ BANK PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, JAIZ BANK displayed solid returns over the last few months and may actually be approaching a breakup point.

ABBEY MORTGAGE BANK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABBEY MORTGAGE BANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, ABBEY MORTGAGE is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JAIZ BANK and ABBEY MORTGAGE

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

The idea behind JAIZ BANK PLC and ABBEY MORTGAGE BANK 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.