Correlation Between Jubilee Life and First Credit

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

Diversification Opportunities for Jubilee Life and First Credit

-0.08

Correlation Coefficient

Jubilee Life  First Credit

Good diversification

The 3 months correlation between Jubilee and First is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Jubilee Life Insurance and First Credit And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Credit And 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 First Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Credit And has no effect on the direction of Jubilee Life i.e., Jubilee Life and First Credit go up and down completely randomly.

Pair Corralation between Jubilee Life and First Credit

Assuming the 90 days trading horizon Jubilee Life Insurance is expected to under-perform the First Credit. But the stock apears to be less risky and, when comparing its historical volatility, Jubilee Life Insurance is 2.36 times less risky than First Credit. The stock trades about -0.03 of its potential returns per unit of risk. The First Credit And is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  817.00  in First Credit And on December 24, 2024 and sell it today you would earn a total of  7.00  from holding First Credit And or generate 0.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.66%
Values	Daily Returns

Jubilee Life Insurance  vs.  First Credit And

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.

First Credit And

Risk-Adjusted Performance

Weak

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

Pair Trading with Jubilee Life and First Credit

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

The idea behind Jubilee Life Insurance and First Credit And 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.