Correlation Between Shell Pakistan and Jubilee Life
Can any of the company-specific risk be diversified away by investing in both Shell Pakistan 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 Shell Pakistan and Jubilee Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shell Pakistan and Jubilee Life Insurance, you can compare the effects of market volatilities on Shell Pakistan 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 Shell Pakistan with a short position of Jubilee Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shell Pakistan and Jubilee Life.
Diversification Opportunities for Shell Pakistan and Jubilee Life
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shell and Jubilee is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Shell Pakistan 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 Shell Pakistan 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 Shell Pakistan 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 Shell Pakistan i.e., Shell Pakistan and Jubilee Life go up and down completely randomly.
Pair Corralation between Shell Pakistan and Jubilee Life
Assuming the 90 days trading horizon Shell Pakistan is expected to under-perform the Jubilee Life. But the stock apears to be less risky and, when comparing its historical volatility, Shell Pakistan is 1.58 times less risky than Jubilee Life. The stock trades about -0.03 of its potential returns per unit of risk. The Jubilee Life Insurance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 13,400 in Jubilee Life Insurance on August 29, 2024 and sell it today you would earn a total of 309.00 from holding Jubilee Life Insurance or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shell Pakistan vs. Jubilee Life Insurance
Performance |
| Timeline |
| Shell Pakistan |
| Jubilee Life Insurance |
Shell Pakistan and Jubilee Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shell Pakistan and Jubilee Life
The main advantage of trading using opposite Shell Pakistan and Jubilee Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shell Pakistan 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.| Shell Pakistan vs. Al Ghazi Tractors | Shell Pakistan vs. Nestle Pakistan | Shell Pakistan vs. Hinopak Motors | Shell Pakistan vs. Abbott Laboratories Pakistan |
| Jubilee Life vs. Habib Bank | Jubilee Life vs. National Bank of | Jubilee Life vs. United Bank | Jubilee Life 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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