Correlation Between Jubilee Life and Century Insurance
Can any of the company-specific risk be diversified away by investing in both Jubilee Life and Century Insurance 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 Jubilee Life and Century Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jubilee Life Insurance and Century Insurance, you can compare the effects of market volatilities on Jubilee Life and Century Insurance 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 Jubilee Life with a short position of Century Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jubilee Life and Century Insurance.
Diversification Opportunities for Jubilee Life and Century Insurance
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jubilee and Century is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Jubilee Life Insurance and Century Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Insurance and Jubilee Life 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 Jubilee Life Insurance are associated (or correlated) with Century Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Insurance has no effect on the direction of Jubilee Life i.e., Jubilee Life and Century Insurance go up and down completely randomly.
Pair Corralation between Jubilee Life and Century Insurance
Assuming the 90 days trading horizon Jubilee Life is expected to generate 6.4 times less return on investment than Century Insurance. In addition to that, Jubilee Life is 1.13 times more volatile than Century Insurance. It trades about 0.05 of its total potential returns per unit of risk. Century Insurance is currently generating about 0.38 per unit of volatility. If you would invest 3,090 in Century Insurance on August 28, 2024 and sell it today you would earn a total of 630.00 from holding Century Insurance or generate 20.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jubilee Life Insurance vs. Century Insurance
Performance |
| Timeline |
| Jubilee Life Insurance |
| Century Insurance |
Jubilee Life and Century Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jubilee Life and Century Insurance
The main advantage of trading using opposite Jubilee Life and Century Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jubilee Life position performs unexpectedly, Century Insurance 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 Century Insurance will offset losses from the drop in Century Insurance's long position.| Jubilee Life vs. Habib Bank | Jubilee Life vs. National Bank of | Jubilee Life vs. United Bank | Jubilee Life vs. MCB Bank |
| Century Insurance vs. Habib Bank | Century Insurance vs. National Bank of | Century Insurance vs. United Bank | Century Insurance 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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