Correlation Between Clean Science and IG Petrochemicals
Can any of the company-specific risk be diversified away by investing in both Clean Science and IG Petrochemicals 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 Clean Science and IG Petrochemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Science and and IG Petrochemicals Limited, you can compare the effects of market volatilities on Clean Science and IG Petrochemicals 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 Clean Science with a short position of IG Petrochemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Science and IG Petrochemicals.
Diversification Opportunities for Clean Science and IG Petrochemicals
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Clean and IGPL is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Clean Science and and IG Petrochemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IG Petrochemicals and Clean Science 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 Clean Science and are associated (or correlated) with IG Petrochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IG Petrochemicals has no effect on the direction of Clean Science i.e., Clean Science and IG Petrochemicals go up and down completely randomly.
Pair Corralation between Clean Science and IG Petrochemicals
Assuming the 90 days trading horizon Clean Science and is expected to generate 1.1 times more return on investment than IG Petrochemicals. However, Clean Science is 1.1 times more volatile than IG Petrochemicals Limited. It trades about 0.04 of its potential returns per unit of risk. IG Petrochemicals Limited is currently generating about -0.23 per unit of risk. If you would invest 139,830 in Clean Science and on October 11, 2024 and sell it today you would earn a total of 1,625 from holding Clean Science and or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Clean Science and vs. IG Petrochemicals Limited
Performance |
| Timeline |
| Clean Science |
| IG Petrochemicals |
Clean Science and IG Petrochemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Science and IG Petrochemicals
The main advantage of trading using opposite Clean Science and IG Petrochemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Science position performs unexpectedly, IG Petrochemicals 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 IG Petrochemicals will offset losses from the drop in IG Petrochemicals' long position.| Clean Science vs. Varun Beverages Limited | Clean Science vs. Data Patterns Limited | Clean Science vs. Juniper Hotels | Clean Science vs. Chalet Hotels Limited |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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