Correlation Between Roshan Packages and IGI Life

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

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

Diversification Opportunities for Roshan Packages and IGI Life

-0.54

Correlation Coefficient

Roshan Packages  IGI Life

Excellent diversification

The 3 months correlation between Roshan and IGI is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Roshan Packages 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 Roshan Packages 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 Roshan Packages 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 Roshan Packages i.e., Roshan Packages and IGI Life go up and down completely randomly.

Pair Corralation between Roshan Packages and IGI Life

Assuming the 90 days trading horizon Roshan Packages is expected to under-perform the IGI Life. But the stock apears to be less risky and, when comparing its historical volatility, Roshan Packages is 2.24 times less risky than IGI Life. The stock trades about -0.1 of its potential returns per unit of risk. The IGI Life Insurance is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,473  in IGI Life Insurance on December 20, 2024 and sell it today you would earn a total of  379.00  from holding IGI Life Insurance or generate 25.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	83.87%
Values	Daily Returns

Roshan Packages  vs.  IGI Life Insurance

Roshan Packages

Risk-Adjusted Performance

Very Weak

Over the last 90 days Roshan Packages has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

IGI Life Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IGI Life Insurance are ranked lower than 9 (%) 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 Roshan Packages and IGI Life

The main advantage of trading using opposite Roshan Packages and IGI Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roshan Packages 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 Roshan Packages 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.