Correlation Between Artistic Denim and IGI Life

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

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

Diversification Opportunities for Artistic Denim and IGI Life

-0.42

Correlation Coefficient

Artistic Denim  IGI Life

Very good diversification

The 3 months correlation between Artistic and IGI is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Artistic Denim Mills and IGI Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGI Life Insurance and Artistic Denim 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 Artistic Denim Mills are associated (or correlated) with IGI Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGI Life Insurance has no effect on the direction of Artistic Denim i.e., Artistic Denim and IGI Life go up and down completely randomly.

Pair Corralation between Artistic Denim and IGI Life

Assuming the 90 days trading horizon Artistic Denim Mills is expected to under-perform the IGI Life. But the stock apears to be less risky and, when comparing its historical volatility, Artistic Denim Mills is 3.22 times less risky than IGI Life. The stock trades about -0.11 of its potential returns per unit of risk. The IGI Life Insurance is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,473  in IGI Life Insurance on December 23, 2024 and sell it today you would earn a total of  220.00  from holding IGI Life Insurance or generate 14.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	84.13%
Values	Daily Returns

Artistic Denim Mills  vs.  IGI Life Insurance

Artistic Denim Mills

Risk-Adjusted Performance

Very Weak

Over the last 90 days Artistic Denim Mills has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

IGI Life Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IGI Life Insurance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IGI Life sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Artistic Denim and IGI Life

The main advantage of trading using opposite Artistic Denim and IGI Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Artistic Denim position performs unexpectedly, IGI 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 IGI Life will offset losses from the drop in IGI Life's long position.

The idea behind Artistic Denim Mills and IGI 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.