Correlation Between Masood Textile and Jubilee Life

Can any of the company-specific risk be diversified away by investing in both Masood Textile 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 Masood Textile and Jubilee Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Masood Textile Mills and Jubilee Life Insurance, you can compare the effects of market volatilities on Masood Textile 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 Masood Textile with a short position of Jubilee Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masood Textile and Jubilee Life.

Diversification Opportunities for Masood Textile and Jubilee Life

-0.44

Correlation Coefficient

Masood Textile  Jubilee Life

Very good diversification

The 3 months correlation between Masood and Jubilee is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Masood Textile Mills 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 Masood Textile 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 Masood Textile Mills 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 Masood Textile i.e., Masood Textile and Jubilee Life go up and down completely randomly.

Pair Corralation between Masood Textile and Jubilee Life

Assuming the 90 days trading horizon Masood Textile Mills is expected to generate 1.23 times more return on investment than Jubilee Life. However, Masood Textile is 1.23 times more volatile than Jubilee Life Insurance. It trades about 0.38 of its potential returns per unit of risk. Jubilee Life Insurance is currently generating about 0.29 per unit of risk. If you would invest  4,170  in Masood Textile Mills on September 5, 2024 and sell it today you would earn a total of  1,161  from holding Masood Textile Mills or generate 27.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	73.91%
Values	Daily Returns

Masood Textile Mills  vs.  Jubilee Life Insurance

Masood Textile Mills

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Masood Textile Mills has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Masood Textile is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Jubilee Life Insurance

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jubilee Life Insurance are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Jubilee Life disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Masood Textile and Jubilee Life

The main advantage of trading using opposite Masood Textile and Jubilee Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masood Textile 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.

The idea behind Masood Textile Mills and Jubilee Life Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.