Correlation Between JAIZ BANK and NPF MICRO

Can any of the company-specific risk be diversified away by investing in both JAIZ BANK and NPF MICRO 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 NPF MICRO 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 NPF MICRO FINANCE, you can compare the effects of market volatilities on JAIZ BANK and NPF MICRO 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 NPF MICRO. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAIZ BANK and NPF MICRO.

Diversification Opportunities for JAIZ BANK and NPF MICRO

0.18

Correlation Coefficient

JAIZ BANK  NPF MICRO

Average diversification

The 3 months correlation between JAIZ and NPF is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding JAIZ BANK PLC and NPF MICRO FINANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NPF MICRO FINANCE 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 NPF MICRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NPF MICRO FINANCE has no effect on the direction of JAIZ BANK i.e., JAIZ BANK and NPF MICRO go up and down completely randomly.

Pair Corralation between JAIZ BANK and NPF MICRO

Assuming the 90 days trading horizon JAIZ BANK PLC is expected to generate 1.32 times more return on investment than NPF MICRO. However, JAIZ BANK is 1.32 times more volatile than NPF MICRO FINANCE. It trades about 0.05 of its potential returns per unit of risk. NPF MICRO FINANCE is currently generating about -0.03 per unit of risk. If you would invest  223.00  in JAIZ BANK PLC on September 2, 2024 and sell it today you would earn a total of  17.00  from holding JAIZ BANK PLC or generate 7.62% return on investment over 90 days.

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

JAIZ BANK PLC  vs.  NPF MICRO FINANCE

JAIZ BANK PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JAIZ BANK PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, JAIZ BANK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NPF MICRO FINANCE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NPF MICRO FINANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, NPF MICRO is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JAIZ BANK and NPF MICRO

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

The idea behind JAIZ BANK PLC and NPF MICRO FINANCE 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 Transaction History module to view history of all your transactions and understand their impact on performance.