Correlation Between Shaheen Insurance and IGI Life

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

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

Diversification Opportunities for Shaheen Insurance and IGI Life

0.87

Correlation Coefficient

Shaheen Insurance  IGI Life

Very poor diversification

The 3 months correlation between Shaheen and IGI is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Shaheen Insurance 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 Shaheen Insurance 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 Shaheen Insurance 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 Shaheen Insurance i.e., Shaheen Insurance and IGI Life go up and down completely randomly.

Pair Corralation between Shaheen Insurance and IGI Life

Assuming the 90 days trading horizon Shaheen Insurance is expected to generate 0.97 times more return on investment than IGI Life. However, Shaheen Insurance is 1.03 times less risky than IGI Life. It trades about 0.27 of its potential returns per unit of risk. IGI Life Insurance is currently generating about -0.05 per unit of risk. If you would invest  585.00  in Shaheen Insurance on October 11, 2024 and sell it today you would earn a total of  100.00  from holding Shaheen Insurance or generate 17.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

Shaheen Insurance  vs.  IGI Life Insurance

Shaheen Insurance

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shaheen Insurance are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Shaheen Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

IGI Life Insurance

Risk-Adjusted Performance

6 of 100

Insignificant

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 Shaheen Insurance and IGI Life

The main advantage of trading using opposite Shaheen Insurance and IGI Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaheen Insurance 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 Shaheen Insurance 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..