Correlation Between Jubilee Life and Shaheen Insurance

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

Diversification Opportunities for Jubilee Life and Shaheen Insurance

0.86

Correlation Coefficient

Jubilee Life  Shaheen Insurance

Very poor diversification

The 3 months correlation between Jubilee and Shaheen is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Jubilee Life Insurance and Shaheen Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaheen 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 Shaheen Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaheen Insurance has no effect on the direction of Jubilee Life i.e., Jubilee Life and Shaheen Insurance go up and down completely randomly.

Pair Corralation between Jubilee Life and Shaheen Insurance

Assuming the 90 days trading horizon Jubilee Life Insurance is expected to generate 1.34 times more return on investment than Shaheen Insurance. However, Jubilee Life is 1.34 times more volatile than Shaheen Insurance. It trades about 0.28 of its potential returns per unit of risk. Shaheen Insurance is currently generating about 0.24 per unit of risk. If you would invest  13,967  in Jubilee Life Insurance on September 15, 2024 and sell it today you would earn a total of  3,794  from holding Jubilee Life Insurance or generate 27.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Jubilee Life Insurance  vs.  Shaheen Insurance

Jubilee Life Insurance

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jubilee Life Insurance are ranked lower than 17 (%) 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.

Shaheen Insurance

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Jubilee Life and Shaheen Insurance

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

The idea behind Jubilee Life Insurance and Shaheen 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.