Correlation Between JS Bank and Century Insurance
Can any of the company-specific risk be diversified away by investing in both JS Bank 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 JS Bank and Century Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JS Bank and Century Insurance, you can compare the effects of market volatilities on JS Bank 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 JS Bank with a short position of Century Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Bank and Century Insurance.
Diversification Opportunities for JS Bank and Century Insurance
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JSBL and Century is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding JS Bank and Century Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Insurance and JS Bank 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 JS Bank 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 JS Bank i.e., JS Bank and Century Insurance go up and down completely randomly.
Pair Corralation between JS Bank and Century Insurance
Assuming the 90 days trading horizon JS Bank is expected to generate 2.65 times less return on investment than Century Insurance. In addition to that, JS Bank is 1.34 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 0.16 per unit of volatility. If you would invest 2,433 in Century Insurance on October 13, 2024 and sell it today you would earn a total of 1,417 from holding Century Insurance or generate 58.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.04% |
| Values | Daily Returns |
JS Bank vs. Century Insurance
Performance |
| Timeline |
| JS Bank |
| Century Insurance |
JS Bank and Century Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JS Bank and Century Insurance
The main advantage of trading using opposite JS Bank and Century Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Bank 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.| JS Bank vs. EFU General Insurance | JS Bank vs. Atlas Insurance | JS Bank vs. Fateh Sports Wear | JS Bank vs. Shaheen Insurance |
| Century Insurance vs. Ittehad Chemicals | Century Insurance vs. Pakistan Hotel Developers | Century Insurance vs. Wah Nobel Chemicals | Century Insurance vs. IBL HealthCare |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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