Correlation Between Premier Insurance and JS Investments

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

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

Diversification Opportunities for Premier Insurance and JS Investments

-0.53

Correlation Coefficient

Premier Insurance  JS Investments

Excellent diversification

The 3 months correlation between Premier and JSIL is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Premier Insurance and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments and Premier Insurance 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 Premier Insurance are associated (or correlated) with JS Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Investments has no effect on the direction of Premier Insurance i.e., Premier Insurance and JS Investments go up and down completely randomly.

Pair Corralation between Premier Insurance and JS Investments

Assuming the 90 days trading horizon Premier Insurance is expected to under-perform the JS Investments. In addition to that, Premier Insurance is 1.01 times more volatile than JS Investments. It trades about -0.02 of its total potential returns per unit of risk. JS Investments is currently generating about 0.07 per unit of volatility. If you would invest  2,212  in JS Investments on September 15, 2024 and sell it today you would earn a total of  255.00  from holding JS Investments or generate 11.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.65%
Values	Daily Returns

Premier Insurance  vs.  JS Investments

Premier Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premier Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Premier Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JS Investments

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JS Investments are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JS Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Premier Insurance and JS Investments

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

The idea behind Premier Insurance and JS Investments 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.