Correlation Between Ganesh Housing and IG Petrochemicals

Can any of the company-specific risk be diversified away by investing in both Ganesh Housing and IG Petrochemicals 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 Ganesh Housing and IG Petrochemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ganesh Housing and IG Petrochemicals Limited, you can compare the effects of market volatilities on Ganesh Housing and IG Petrochemicals 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 Ganesh Housing with a short position of IG Petrochemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ganesh Housing and IG Petrochemicals.

Diversification Opportunities for Ganesh Housing and IG Petrochemicals

0.2

Correlation Coefficient

Ganesh Housing  IG Petrochemicals

Modest diversification

The 3 months correlation between Ganesh and IGPL is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ganesh Housing and IG Petrochemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IG Petrochemicals and Ganesh Housing 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 Ganesh Housing are associated (or correlated) with IG Petrochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IG Petrochemicals has no effect on the direction of Ganesh Housing i.e., Ganesh Housing and IG Petrochemicals go up and down completely randomly.

Pair Corralation between Ganesh Housing and IG Petrochemicals

Assuming the 90 days trading horizon Ganesh Housing is expected to generate 1.36 times more return on investment than IG Petrochemicals. However, Ganesh Housing is 1.36 times more volatile than IG Petrochemicals Limited. It trades about 0.1 of its potential returns per unit of risk. IG Petrochemicals Limited is currently generating about 0.03 per unit of risk. If you would invest  37,409  in Ganesh Housing on October 5, 2024 and sell it today you would earn a total of  92,516  from holding Ganesh Housing or generate 247.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Ganesh Housing  vs.  IG Petrochemicals Limited

Ganesh Housing

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ganesh Housing are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Ganesh Housing demonstrated solid returns over the last few months and may actually be approaching a breakup point.

IG Petrochemicals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IG Petrochemicals Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IG Petrochemicals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ganesh Housing and IG Petrochemicals

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

The idea behind Ganesh Housing and IG Petrochemicals Limited 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.