Correlation Between LGI Homes and Indus Gas

Can any of the company-specific risk be diversified away by investing in both LGI Homes and Indus Gas 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 LGI Homes and Indus Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LGI Homes and Indus Gas, you can compare the effects of market volatilities on LGI Homes and Indus Gas 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 LGI Homes with a short position of Indus Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and Indus Gas.

Diversification Opportunities for LGI Homes and Indus Gas

0.0

Correlation Coefficient

LGI Homes  Indus Gas

Pay attention - limited upside

The 3 months correlation between LGI and Indus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and Indus Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indus Gas and LGI Homes 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 LGI Homes are associated (or correlated) with Indus Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indus Gas has no effect on the direction of LGI Homes i.e., LGI Homes and Indus Gas go up and down completely randomly.

Pair Corralation between LGI Homes and Indus Gas

If you would invest  0.00  in Indus Gas on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Indus Gas or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

LGI Homes  vs.  Indus Gas

LGI Homes

Risk-Adjusted Performance

Very Weak

Over the last 90 days LGI Homes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Indus Gas

Risk-Adjusted Performance

OK

Over the last 90 days Indus Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Indus Gas is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LGI Homes and Indus Gas

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

The idea behind LGI Homes and Indus Gas 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 Global Correlations module to find global opportunities by holding instruments from different markets.