Correlation Between Jubilee Life and Pak Gulf

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

Diversification Opportunities for Jubilee Life and Pak Gulf

0.38

Correlation Coefficient

Jubilee Life  Pak Gulf

Weak diversification

The 3 months correlation between Jubilee and Pak is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Jubilee Life Insurance and Pak Gulf Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pak Gulf Leasing 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 Pak Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pak Gulf Leasing has no effect on the direction of Jubilee Life i.e., Jubilee Life and Pak Gulf go up and down completely randomly.

Pair Corralation between Jubilee Life and Pak Gulf

Assuming the 90 days trading horizon Jubilee Life Insurance is expected to generate 0.38 times more return on investment than Pak Gulf. However, Jubilee Life Insurance is 2.6 times less risky than Pak Gulf. It trades about -0.16 of its potential returns per unit of risk. Pak Gulf Leasing is currently generating about -0.11 per unit of risk. If you would invest  17,781  in Jubilee Life Insurance on December 4, 2024 and sell it today you would lose (951.00) from holding Jubilee Life Insurance or give up 5.35% of portfolio value over 90 days.

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

Jubilee Life Insurance  vs.  Pak Gulf Leasing

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.

Pak Gulf Leasing

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pak Gulf Leasing are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pak Gulf sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jubilee Life and Pak Gulf

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

The idea behind Jubilee Life Insurance and Pak Gulf Leasing 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.