Correlation Between Unilever Pakistan and Jubilee Life

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

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

Diversification Opportunities for Unilever Pakistan and Jubilee Life

-0.71

Correlation Coefficient

Unilever Pakistan  Jubilee Life

Pay attention - limited upside

The 3 months correlation between Unilever and Jubilee is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Unilever Pakistan Foods 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 Unilever Pakistan 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 Unilever Pakistan Foods 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 Unilever Pakistan i.e., Unilever Pakistan and Jubilee Life go up and down completely randomly.

Pair Corralation between Unilever Pakistan and Jubilee Life

Assuming the 90 days trading horizon Unilever Pakistan Foods is expected to generate 0.41 times more return on investment than Jubilee Life. However, Unilever Pakistan Foods is 2.44 times less risky than Jubilee Life. It trades about 0.21 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  2,076,741  in Unilever Pakistan Foods on December 26, 2024 and sell it today you would earn a total of  278,159  from holding Unilever Pakistan Foods or generate 13.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.16%
Values	Daily Returns

Unilever Pakistan Foods  vs.  Jubilee Life Insurance

Unilever Pakistan Foods

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Unilever Pakistan Foods are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Unilever Pakistan 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 Unilever Pakistan and Jubilee Life

The main advantage of trading using opposite Unilever Pakistan and Jubilee Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever Pakistan 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 Unilever Pakistan Foods 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.