Correlation Between Jubilee Life and Bawany Air

Can any of the company-specific risk be diversified away by investing in both Jubilee Life and Bawany Air 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 Bawany Air 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 Bawany Air Products, you can compare the effects of market volatilities on Jubilee Life and Bawany Air 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 Bawany Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jubilee Life and Bawany Air.

Diversification Opportunities for Jubilee Life and Bawany Air

0.69

Correlation Coefficient

Jubilee Life  Bawany Air

Poor diversification

The 3 months correlation between Jubilee and Bawany is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Jubilee Life Insurance and Bawany Air Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bawany Air Products 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 Bawany Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bawany Air Products has no effect on the direction of Jubilee Life i.e., Jubilee Life and Bawany Air go up and down completely randomly.

Pair Corralation between Jubilee Life and Bawany Air

Assuming the 90 days trading horizon Jubilee Life Insurance is expected to generate 0.68 times more return on investment than Bawany Air. However, Jubilee Life Insurance is 1.48 times less risky than Bawany Air. It trades about -0.03 of its potential returns per unit of risk. Bawany Air Products is currently generating about -0.2 per unit of risk. If you would invest  17,887  in Jubilee Life Insurance on December 24, 2024 and sell it today you would lose (1,155) from holding Jubilee Life Insurance or give up 6.46% of portfolio value over 90 days.

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

Jubilee Life Insurance  vs.  Bawany Air Products

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 quite persistent forward indicators, Jubilee Life is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Bawany Air Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bawany Air Products has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Jubilee Life and Bawany Air

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

The idea behind Jubilee Life Insurance and Bawany Air Products 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.