Correlation Between IG Petrochemicals and Karur Vysya

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

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

Diversification Opportunities for IG Petrochemicals and Karur Vysya

0.26

Correlation Coefficient

IG Petrochemicals  Karur Vysya

Modest diversification

The 3 months correlation between IGPL and Karur is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding IG Petrochemicals Limited and Karur Vysya Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karur Vysya Bank and IG Petrochemicals 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 IG Petrochemicals Limited are associated (or correlated) with Karur Vysya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karur Vysya Bank has no effect on the direction of IG Petrochemicals i.e., IG Petrochemicals and Karur Vysya go up and down completely randomly.

Pair Corralation between IG Petrochemicals and Karur Vysya

Assuming the 90 days trading horizon IG Petrochemicals Limited is expected to under-perform the Karur Vysya. In addition to that, IG Petrochemicals is 1.48 times more volatile than Karur Vysya Bank. It trades about -0.04 of its total potential returns per unit of risk. Karur Vysya Bank is currently generating about 0.04 per unit of volatility. If you would invest  21,955  in Karur Vysya Bank on September 21, 2024 and sell it today you would earn a total of  893.00  from holding Karur Vysya Bank or generate 4.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

IG Petrochemicals Limited  vs.  Karur Vysya Bank

IG Petrochemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IG Petrochemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Karur Vysya Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Karur Vysya Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Karur Vysya is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IG Petrochemicals and Karur Vysya

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

The idea behind IG Petrochemicals Limited and Karur Vysya Bank 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.