Correlation Between United Insurance and JS Investments
Can any of the company-specific risk be diversified away by investing in both United Insurance and JS Investments 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 United Insurance and JS Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance and JS Investments, you can compare the effects of market volatilities on United Insurance and JS Investments 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 United Insurance with a short position of JS Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and JS Investments.
Diversification Opportunities for United Insurance and JS Investments
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and JSIL is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments and United Insurance 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 United Insurance are associated (or correlated) with JS Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Investments has no effect on the direction of United Insurance i.e., United Insurance and JS Investments go up and down completely randomly.
Pair Corralation between United Insurance and JS Investments
Assuming the 90 days trading horizon United Insurance is expected to generate 1.27 times less return on investment than JS Investments. But when comparing it to its historical volatility, United Insurance is 1.67 times less risky than JS Investments. It trades about 0.1 of its potential returns per unit of risk. JS Investments is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,400 in JS Investments on August 31, 2024 and sell it today you would earn a total of 1,157 from holding JS Investments or generate 82.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 70.67% |
| Values | Daily Returns |
United Insurance vs. JS Investments
Performance |
| Timeline |
| United Insurance |
| JS Investments |
United Insurance and JS Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and JS Investments
The main advantage of trading using opposite United Insurance and JS Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, JS Investments 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 JS Investments will offset losses from the drop in JS Investments' long position.| United Insurance vs. Habib Bank | United Insurance vs. National Bank of | United Insurance vs. United Bank | United Insurance vs. MCB Bank |
| JS Investments vs. Masood Textile Mills | JS Investments vs. Fauji Foods | JS Investments vs. KSB Pumps | JS Investments vs. Mari Petroleum |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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