Correlation Between IGI Life and Masood Textile
Can any of the company-specific risk be diversified away by investing in both IGI Life and Masood Textile 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 IGI Life and Masood Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGI Life Insurance and Masood Textile Mills, you can compare the effects of market volatilities on IGI Life and Masood Textile 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 IGI Life with a short position of Masood Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGI Life and Masood Textile.
Diversification Opportunities for IGI Life and Masood Textile
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IGI and Masood is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding IGI Life Insurance and Masood Textile Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masood Textile Mills and IGI Life 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 IGI Life Insurance are associated (or correlated) with Masood Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masood Textile Mills has no effect on the direction of IGI Life i.e., IGI Life and Masood Textile go up and down completely randomly.
Pair Corralation between IGI Life and Masood Textile
Assuming the 90 days trading horizon IGI Life Insurance is expected to under-perform the Masood Textile. But the stock apears to be less risky and, when comparing its historical volatility, IGI Life Insurance is 1.1 times less risky than Masood Textile. The stock trades about -0.24 of its potential returns per unit of risk. The Masood Textile Mills is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4,981 in Masood Textile Mills on October 29, 2024 and sell it today you would earn a total of 535.00 from holding Masood Textile Mills or generate 10.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
IGI Life Insurance vs. Masood Textile Mills
Performance |
| Timeline |
| IGI Life Insurance |
| Masood Textile Mills |
IGI Life and Masood Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGI Life and Masood Textile
The main advantage of trading using opposite IGI Life and Masood Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGI Life position performs unexpectedly, Masood Textile 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 Masood Textile will offset losses from the drop in Masood Textile's long position.| IGI Life vs. Bawany Air Products | IGI Life vs. Atlas Insurance | IGI Life vs. Grays Leasing | IGI Life vs. Apna Microfinance Bank |
| Masood Textile vs. Quice Food Industries | Masood Textile vs. Murree Brewery | Masood Textile vs. Air Link Communication | Masood Textile 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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