Correlation Between Hi Tech and IGI Life
Can any of the company-specific risk be diversified away by investing in both Hi Tech 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 Hi Tech and IGI Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hi Tech Lubricants and IGI Life Insurance, you can compare the effects of market volatilities on Hi Tech 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 Hi Tech with a short position of IGI Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Tech and IGI Life.
Diversification Opportunities for Hi Tech and IGI Life
Poor diversification
The 3 months correlation between HTL and IGI is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hi Tech Lubricants 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 Hi Tech 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 Hi Tech Lubricants 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 Hi Tech i.e., Hi Tech and IGI Life go up and down completely randomly.
Pair Corralation between Hi Tech and IGI Life
Assuming the 90 days trading horizon Hi Tech Lubricants is expected to under-perform the IGI Life. But the stock apears to be less risky and, when comparing its historical volatility, Hi Tech Lubricants is 1.65 times less risky than IGI Life. The stock trades about -0.07 of its potential returns per unit of risk. The IGI Life Insurance is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,549 in IGI Life Insurance on November 7, 2024 and sell it today you would lose (22.00) from holding IGI Life Insurance or give up 1.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Hi Tech Lubricants vs. IGI Life Insurance
Performance |
| Timeline |
| Hi Tech Lubricants |
| IGI Life Insurance |
Hi Tech and IGI Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hi Tech and IGI Life
The main advantage of trading using opposite Hi Tech and IGI Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Tech 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 Hi Tech Lubricants 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.| IGI Life vs. Agha Steel Industries | IGI Life vs. Honda Atlas Cars | IGI Life vs. Metropolitan Steel Corp | IGI Life vs. National Foods |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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