Correlation Between Crescent Steel and IGI Life

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

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

Diversification Opportunities for Crescent Steel and IGI Life

-0.33

Correlation Coefficient

Crescent Steel  IGI Life

Very good diversification

The 3 months correlation between Crescent and IGI is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Steel Allied 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 Crescent Steel 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 Crescent Steel Allied 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 Crescent Steel i.e., Crescent Steel and IGI Life go up and down completely randomly.

Pair Corralation between Crescent Steel and IGI Life

Assuming the 90 days trading horizon Crescent Steel is expected to generate 1.01 times less return on investment than IGI Life. In addition to that, Crescent Steel is 1.36 times more volatile than IGI Life Insurance. It trades about 0.03 of its total potential returns per unit of risk. IGI Life Insurance is currently generating about 0.04 per unit of volatility. If you would invest  1,354  in IGI Life Insurance on October 25, 2024 and sell it today you would earn a total of  40.00  from holding IGI Life Insurance or generate 2.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.68%
Values	Daily Returns

Crescent Steel Allied  vs.  IGI Life Insurance

Crescent Steel Allied

Risk-Adjusted Performance

0 of 100

Very Weak

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

IGI Life Insurance

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IGI Life Insurance are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IGI Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Crescent Steel and IGI Life

The main advantage of trading using opposite Crescent Steel and IGI Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Steel 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 Crescent Steel Allied 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.