Correlation Between Fauji Fertilizer and Jubilee Life
Can any of the company-specific risk be diversified away by investing in both Fauji Fertilizer 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 Fauji Fertilizer and Jubilee Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fauji Fertilizer and Jubilee Life Insurance, you can compare the effects of market volatilities on Fauji Fertilizer 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 Fauji Fertilizer with a short position of Jubilee Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fauji Fertilizer and Jubilee Life.
Diversification Opportunities for Fauji Fertilizer and Jubilee Life
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fauji and Jubilee is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fauji Fertilizer 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 Fauji Fertilizer 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 Fauji Fertilizer 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 Fauji Fertilizer i.e., Fauji Fertilizer and Jubilee Life go up and down completely randomly.
Pair Corralation between Fauji Fertilizer and Jubilee Life
Assuming the 90 days trading horizon Fauji Fertilizer is expected to generate 1.17 times less return on investment than Jubilee Life. But when comparing it to its historical volatility, Fauji Fertilizer is 1.02 times less risky than Jubilee Life. It trades about 0.25 of its potential returns per unit of risk. Jubilee Life Insurance is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 13,000 in Jubilee Life Insurance on September 5, 2024 and sell it today you would earn a total of 2,891 from holding Jubilee Life Insurance or generate 22.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fauji Fertilizer vs. Jubilee Life Insurance
Performance |
| Timeline |
| Fauji Fertilizer |
| Jubilee Life Insurance |
Fauji Fertilizer and Jubilee Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fauji Fertilizer and Jubilee Life
The main advantage of trading using opposite Fauji Fertilizer and Jubilee Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fauji Fertilizer 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.| Fauji Fertilizer vs. National Bank of | Fauji Fertilizer vs. International Steels | Fauji Fertilizer vs. JS Global Banking | Fauji Fertilizer vs. Habib Insurance |
| Jubilee Life vs. Pakistan Tobacco | Jubilee Life vs. Aisha Steel Mills | Jubilee Life vs. Century Insurance | Jubilee Life vs. Sindh Modaraba Management |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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