Correlation Between IGI Life and Shaheen Insurance

Can any of the company-specific risk be diversified away by investing in both IGI Life and Shaheen Insurance 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 Shaheen Insurance 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 Shaheen Insurance, you can compare the effects of market volatilities on IGI Life and Shaheen Insurance 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 Shaheen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGI Life and Shaheen Insurance.

Diversification Opportunities for IGI Life and Shaheen Insurance

0.07

Correlation Coefficient

IGI Life  Shaheen Insurance

Significant diversification

The 3 months correlation between IGI and Shaheen is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding IGI Life Insurance and Shaheen Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaheen Insurance 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 Shaheen Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaheen Insurance has no effect on the direction of IGI Life i.e., IGI Life and Shaheen Insurance go up and down completely randomly.

Pair Corralation between IGI Life and Shaheen Insurance

Assuming the 90 days trading horizon IGI Life Insurance is expected to generate 1.6 times more return on investment than Shaheen Insurance. However, IGI Life is 1.6 times more volatile than Shaheen Insurance. It trades about 0.08 of its potential returns per unit of risk. Shaheen Insurance is currently generating about 0.05 per unit of risk. If you would invest  1,473  in IGI Life Insurance on December 22, 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 Together
Strength	Insignificant
Accuracy	86.67%
Values	Daily Returns

IGI Life Insurance  vs.  Shaheen Insurance

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.

Shaheen Insurance

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shaheen Insurance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shaheen Insurance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IGI Life and Shaheen Insurance

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

The idea behind IGI Life Insurance and Shaheen 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.