Correlation Between NetSol Technologies and IGI Life

Can any of the company-specific risk be diversified away by investing in both NetSol Technologies and IGI Life 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 NetSol Technologies and IGI Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NetSol Technologies and IGI Life Insurance, you can compare the effects of market volatilities on NetSol Technologies and IGI Life 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 NetSol Technologies with a short position of IGI Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetSol Technologies and IGI Life.

Diversification Opportunities for NetSol Technologies and IGI Life

-0.32

Correlation Coefficient

NetSol Technologies  IGI Life

Very good diversification

The 3 months correlation between NetSol and IGI is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding NetSol Technologies and IGI Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGI Life Insurance and NetSol Technologies 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 NetSol Technologies are associated (or correlated) with IGI Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGI Life Insurance has no effect on the direction of NetSol Technologies i.e., NetSol Technologies and IGI Life go up and down completely randomly.

Pair Corralation between NetSol Technologies and IGI Life

Assuming the 90 days trading horizon NetSol Technologies is expected to under-perform the IGI Life. But the stock apears to be less risky and, when comparing its historical volatility, NetSol Technologies is 2.35 times less risky than IGI Life. The stock trades about -0.05 of its potential returns per unit of risk. The IGI Life Insurance is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,473  in IGI Life Insurance on December 23, 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 Against
Strength	Insignificant
Accuracy	84.13%
Values	Daily Returns

NetSol Technologies  vs.  IGI Life Insurance

NetSol Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days NetSol Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NetSol Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with NetSol Technologies and IGI Life

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

The idea behind NetSol Technologies and IGI Life 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.