Correlation Between Jubilee Life and Ghani Gases

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

Diversification Opportunities for Jubilee Life and Ghani Gases

0.3

Correlation Coefficient

Jubilee Life  Ghani Gases

Weak diversification

The 3 months correlation between Jubilee and Ghani is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Jubilee Life Insurance and Ghani Gases in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ghani Gases 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 Ghani Gases. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ghani Gases has no effect on the direction of Jubilee Life i.e., Jubilee Life and Ghani Gases go up and down completely randomly.

Pair Corralation between Jubilee Life and Ghani Gases

Assuming the 90 days trading horizon Jubilee Life Insurance is expected to under-perform the Ghani Gases. But the stock apears to be less risky and, when comparing its historical volatility, Jubilee Life Insurance is 1.04 times less risky than Ghani Gases. The stock trades about -0.03 of its potential returns per unit of risk. The Ghani Gases is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,505  in Ghani Gases on December 24, 2024 and sell it today you would lose (104.00) from holding Ghani Gases or give up 6.91% of portfolio value over 90 days.

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

Jubilee Life Insurance  vs.  Ghani Gases

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.

Ghani Gases

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ghani Gases has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Ghani Gases is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Jubilee Life and Ghani Gases

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

The idea behind Jubilee Life Insurance and Ghani Gases 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.