Correlation Between Jubilee Life and EFU General

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

Diversification Opportunities for Jubilee Life and EFU General

-0.79

Correlation Coefficient

Jubilee Life  EFU General

Pay attention - limited upside

The 3 months correlation between Jubilee and EFU is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Jubilee Life Insurance and EFU General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EFU General Insurance 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 EFU General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EFU General Insurance has no effect on the direction of Jubilee Life i.e., Jubilee Life and EFU General go up and down completely randomly.

Pair Corralation between Jubilee Life and EFU General

Assuming the 90 days trading horizon Jubilee Life Insurance is expected to under-perform the EFU General. But the stock apears to be less risky and, when comparing its historical volatility, Jubilee Life Insurance is 1.27 times less risky than EFU General. The stock trades about -0.16 of its potential returns per unit of risk. The EFU General Insurance is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  11,891  in EFU General Insurance on December 4, 2024 and sell it today you would earn a total of  507.00  from holding EFU General Insurance or generate 4.26% return on investment over 90 days.

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

Jubilee Life Insurance  vs.  EFU General Insurance

Jubilee Life Insurance

Risk-Adjusted Performance

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 latest stock price mess, may contribute to short-term losses for the institutional investors.

EFU General Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days EFU General Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EFU General is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jubilee Life and EFU General

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

The idea behind Jubilee Life Insurance and EFU General 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.