Correlation Between Jubilee Life and International Steels

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

Diversification Opportunities for Jubilee Life and International Steels

0.89

Correlation Coefficient

Jubilee Life  International Steels

Very poor diversification

The 3 months correlation between Jubilee and International is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Jubilee Life Insurance and International Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Steels 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 International Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Steels has no effect on the direction of Jubilee Life i.e., Jubilee Life and International Steels go up and down completely randomly.

Pair Corralation between Jubilee Life and International Steels

Assuming the 90 days trading horizon Jubilee Life is expected to generate 1.25 times less return on investment than International Steels. But when comparing it to its historical volatility, Jubilee Life Insurance is 1.09 times less risky than International Steels. It trades about 0.08 of its potential returns per unit of risk. International Steels is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,352  in International Steels on October 9, 2024 and sell it today you would earn a total of  3,479  from holding International Steels or generate 54.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.92%
Values	Daily Returns

Jubilee Life Insurance  vs.  International Steels

Jubilee Life Insurance

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jubilee Life Insurance are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Jubilee Life disclosed solid returns over the last few months and may actually be approaching a breakup point.

International Steels

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Steels are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, International Steels reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jubilee Life and International Steels

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

The idea behind Jubilee Life Insurance and International Steels 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.