Correlation Between Pakistan Synthetics and Jubilee Life

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

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

Diversification Opportunities for Pakistan Synthetics and Jubilee Life

-0.52

Correlation Coefficient

Pakistan Synthetics  Jubilee Life

Excellent diversification

The 3 months correlation between Pakistan and Jubilee is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Synthetics 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 Pakistan Synthetics 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 Pakistan Synthetics 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 Pakistan Synthetics i.e., Pakistan Synthetics and Jubilee Life go up and down completely randomly.

Pair Corralation between Pakistan Synthetics and Jubilee Life

Assuming the 90 days trading horizon Pakistan Synthetics is expected to generate 1.6 times more return on investment than Jubilee Life. However, Pakistan Synthetics is 1.6 times more volatile than Jubilee Life Insurance. It trades about 0.08 of its potential returns per unit of risk. Jubilee Life Insurance is currently generating about -0.05 per unit of risk. If you would invest  3,638  in Pakistan Synthetics on December 25, 2024 and sell it today you would earn a total of  538.00  from holding Pakistan Synthetics or generate 14.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Pakistan Synthetics  vs.  Jubilee Life Insurance

Pakistan Synthetics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pakistan Synthetics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pakistan Synthetics sustained solid returns over the last few months and may actually be approaching a breakup point.

Jubilee Life Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jubilee Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Pakistan Synthetics and Jubilee Life

The main advantage of trading using opposite Pakistan Synthetics and Jubilee Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Synthetics 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 Pakistan Synthetics 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.