Correlation Between JS Global and Jubilee Life

Can any of the company-specific risk be diversified away by investing in both JS Global and Jubilee Life 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 JS Global and Jubilee Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JS Global Banking and Jubilee Life Insurance, you can compare the effects of market volatilities on JS Global and Jubilee Life 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 JS Global with a short position of Jubilee Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Global and Jubilee Life.

Diversification Opportunities for JS Global and Jubilee Life

0.83

Correlation Coefficient

JS Global  Jubilee Life

Very poor diversification

The 3 months correlation between JSGBETF and Jubilee is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding JS Global Banking and Jubilee Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jubilee Life Insurance and JS Global 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 JS Global Banking are associated (or correlated) with Jubilee Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jubilee Life Insurance has no effect on the direction of JS Global i.e., JS Global and Jubilee Life go up and down completely randomly.

Pair Corralation between JS Global and Jubilee Life

Assuming the 90 days trading horizon JS Global is expected to generate 1.3 times less return on investment than Jubilee Life. In addition to that, JS Global is 1.14 times more volatile than Jubilee Life Insurance. It trades about 0.14 of its total potential returns per unit of risk. Jubilee Life Insurance is currently generating about 0.21 per unit of volatility. If you would invest  12,394  in Jubilee Life Insurance on September 16, 2024 and sell it today you would earn a total of  5,367  from holding Jubilee Life Insurance or generate 43.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.31%
Values	Daily Returns

JS Global Banking  vs.  Jubilee Life Insurance

JS Global Banking

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JS Global Banking are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, JS Global reported solid returns over the last few months and may actually be approaching a breakup point.

Jubilee Life Insurance

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jubilee Life Insurance are ranked lower than 16 (%) 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.

Pair Trading with JS Global and Jubilee Life

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

The idea behind JS Global Banking and Jubilee Life 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.