Correlation Between JS Bank and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both JS Bank and Universal 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 Universal 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 Universal Insurance, you can compare the effects of market volatilities on JS Bank and Universal 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 Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Bank and Universal Insurance.
Diversification Opportunities for JS Bank and Universal Insurance
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JSBL and Universal is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding JS Bank and Universal Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal 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 Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of JS Bank i.e., JS Bank and Universal Insurance go up and down completely randomly.
Pair Corralation between JS Bank and Universal Insurance
Assuming the 90 days trading horizon JS Bank is expected to generate 2.74 times less return on investment than Universal Insurance. But when comparing it to its historical volatility, JS Bank is 2.71 times less risky than Universal Insurance. It trades about 0.08 of its potential returns per unit of risk. Universal Insurance is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 390.00 in Universal Insurance on October 13, 2024 and sell it today you would earn a total of 622.00 from holding Universal Insurance or generate 159.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 63.18% |
| Values | Daily Returns |
JS Bank vs. Universal Insurance
Performance |
| Timeline |
| JS Bank |
| Universal Insurance |
JS Bank and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JS Bank and Universal Insurance
The main advantage of trading using opposite JS Bank and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Bank position performs unexpectedly, Universal 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 Universal Insurance will offset losses from the drop in Universal Insurance's long position.| JS Bank vs. MCB Investment Manag | JS Bank vs. Sardar Chemical Industries | JS Bank vs. Invest Capital Investment | JS Bank vs. Reliance Insurance Co |
| Universal Insurance vs. Unilever Pakistan Foods | Universal Insurance vs. Invest Capital Investment | Universal Insurance vs. Pakistan Reinsurance | Universal Insurance vs. Century Insurance |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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