Correlation Between IGI Life and Data Agro
Can any of the company-specific risk be diversified away by investing in both IGI Life and Data Agro 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 IGI Life and Data Agro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGI Life Insurance and Data Agro, you can compare the effects of market volatilities on IGI Life and Data Agro 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 IGI Life with a short position of Data Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGI Life and Data Agro.
Diversification Opportunities for IGI Life and Data Agro
Very weak diversification
The 3 months correlation between IGI and Data is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding IGI Life Insurance and Data Agro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Agro and IGI Life 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 IGI Life Insurance are associated (or correlated) with Data Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Agro has no effect on the direction of IGI Life i.e., IGI Life and Data Agro go up and down completely randomly.
Pair Corralation between IGI Life and Data Agro
Assuming the 90 days trading horizon IGI Life is expected to generate 14.29 times less return on investment than Data Agro. But when comparing it to its historical volatility, IGI Life Insurance is 1.53 times less risky than Data Agro. It trades about 0.01 of its potential returns per unit of risk. Data Agro is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 8,732 in Data Agro on October 26, 2024 and sell it today you would earn a total of 3,468 from holding Data Agro or generate 39.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 93.55% |
Values | Daily Returns |
IGI Life Insurance vs. Data Agro
Performance |
Timeline |
IGI Life Insurance |
Data Agro |
IGI Life and Data Agro Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IGI Life and Data Agro
The main advantage of trading using opposite IGI Life and Data Agro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGI Life position performs unexpectedly, Data Agro 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 Data Agro will offset losses from the drop in Data Agro's long position.IGI Life vs. Pakistan Aluminium Beverage | ||
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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