Correlation Between Century Insurance and JS Investments
Can any of the company-specific risk be diversified away by investing in both Century 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 Century 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 Century Insurance and JS Investments, you can compare the effects of market volatilities on Century 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 Century Insurance with a short position of JS Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Insurance and JS Investments.
Diversification Opportunities for Century Insurance and JS Investments
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and JSIL is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Century Insurance and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments 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 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 Century Insurance i.e., Century Insurance and JS Investments go up and down completely randomly.
Pair Corralation between Century Insurance and JS Investments
Assuming the 90 days trading horizon Century Insurance is expected to generate 0.96 times more return on investment than JS Investments. However, Century Insurance is 1.04 times less risky than JS Investments. It trades about 0.11 of its potential returns per unit of risk. JS Investments is currently generating about 0.06 per unit of risk. If you would invest 1,219 in Century Insurance on August 24, 2024 and sell it today you would earn a total of 2,381 from holding Century Insurance or generate 195.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Insurance vs. JS Investments
Performance |
| Timeline |
| Century Insurance |
| JS Investments |
Century Insurance and JS Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Insurance and JS Investments
The main advantage of trading using opposite Century Insurance and JS Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century 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.| Century Insurance vs. Packages | Century Insurance vs. WorldCall Telecom | Century Insurance vs. Air Link Communication | Century Insurance vs. Nimir Industrial Chemical |
| JS Investments vs. Amreli Steels | JS Investments vs. Dost Steels | JS Investments vs. Unilever Pakistan Foods | JS Investments vs. Shifa International Hospitals |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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