Correlation Between Century Insurance and Jubilee Life
Can any of the company-specific risk be diversified away by investing in both Century Insurance 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 Century Insurance and Jubilee Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Insurance and Jubilee Life Insurance, you can compare the effects of market volatilities on Century Insurance 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 Century Insurance with a short position of Jubilee Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Insurance and Jubilee Life.
Diversification Opportunities for Century Insurance and Jubilee Life
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and Jubilee is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Century Insurance 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 Century 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 Century Insurance 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 Century Insurance i.e., Century Insurance and Jubilee Life go up and down completely randomly.
Pair Corralation between Century Insurance and Jubilee Life
Assuming the 90 days trading horizon Century Insurance is expected to generate 1.59 times more return on investment than Jubilee Life. However, Century Insurance is 1.59 times more volatile than Jubilee Life Insurance. It trades about 0.12 of its potential returns per unit of risk. Jubilee Life Insurance is currently generating about 0.1 per unit of risk. If you would invest 1,661 in Century Insurance on August 25, 2024 and sell it today you would earn a total of 1,939 from holding Century Insurance or generate 116.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 76.81% |
| Values | Daily Returns |
Century Insurance vs. Jubilee Life Insurance
Performance |
| Timeline |
| Century Insurance |
| Jubilee Life Insurance |
Century Insurance and Jubilee Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Insurance and Jubilee Life
The main advantage of trading using opposite Century Insurance and Jubilee Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Insurance 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.| Century Insurance vs. Packages | Century Insurance vs. WorldCall Telecom | Century Insurance vs. Air Link Communication | Century Insurance vs. Nimir Industrial Chemical |
| Jubilee Life vs. Habib Bank | Jubilee Life vs. National Bank of | Jubilee Life vs. United Bank | Jubilee Life vs. MCB Bank |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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