Correlation Between Jubilee Life and Askari Bank

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

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

Diversification Opportunities for Jubilee Life and Askari Bank

0.1

Correlation Coefficient

Jubilee Life  Askari Bank

Average diversification

The 3 months correlation between Jubilee and Askari is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Jubilee Life Insurance and Askari Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Askari Bank and Jubilee Life 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 Jubilee Life Insurance are associated (or correlated) with Askari Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Askari Bank has no effect on the direction of Jubilee Life i.e., Jubilee Life and Askari Bank go up and down completely randomly.

Pair Corralation between Jubilee Life and Askari Bank

Assuming the 90 days trading horizon Jubilee Life Insurance is expected to under-perform the Askari Bank. But the stock apears to be less risky and, when comparing its historical volatility, Jubilee Life Insurance is 1.22 times less risky than Askari Bank. The stock trades about -0.16 of its potential returns per unit of risk. The Askari Bank is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  4,261  in Askari Bank on December 4, 2024 and sell it today you would lose (246.00) from holding Askari Bank or give up 5.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.0%
Values	Daily Returns

Jubilee Life Insurance  vs.  Askari Bank

Jubilee Life Insurance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jubilee Life Insurance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Jubilee Life is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Askari Bank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Askari Bank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Askari Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Jubilee Life and Askari Bank

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

The idea behind Jubilee Life Insurance and Askari 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.