Correlation Between Unilever Pakistan and Jubilee Life
Can any of the company-specific risk be diversified away by investing in both Unilever 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 Unilever 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 Unilever Pakistan Foods and Jubilee Life Insurance, you can compare the effects of market volatilities on Unilever 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 Unilever Pakistan with a short position of Jubilee Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever Pakistan and Jubilee Life.
Diversification Opportunities for Unilever Pakistan and Jubilee Life
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Unilever and Jubilee is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Unilever Pakistan Foods 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 Unilever 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 Unilever Pakistan Foods 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 Unilever Pakistan i.e., Unilever Pakistan and Jubilee Life go up and down completely randomly.
Pair Corralation between Unilever Pakistan and Jubilee Life
Assuming the 90 days trading horizon Unilever Pakistan is expected to generate 1.66 times less return on investment than Jubilee Life. But when comparing it to its historical volatility, Unilever Pakistan Foods is 2.17 times less risky than Jubilee Life. It trades about 0.14 of its potential returns per unit of risk. Jubilee Life Insurance is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 13,400 in Jubilee Life Insurance on August 27, 2024 and sell it today you would earn a total of 700.00 from holding Jubilee Life Insurance or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever Pakistan Foods vs. Jubilee Life Insurance
Performance |
| Timeline |
| Unilever Pakistan Foods |
| Jubilee Life Insurance |
Unilever Pakistan and Jubilee Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever Pakistan and Jubilee Life
The main advantage of trading using opposite Unilever Pakistan and Jubilee Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever 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.| Unilever Pakistan vs. Nimir Industrial Chemical | Unilever Pakistan vs. IBL HealthCare | Unilever Pakistan vs. Air Link Communication | Unilever Pakistan vs. United Insurance |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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