Correlation Between IG Petrochemicals and Computer Age
Can any of the company-specific risk be diversified away by investing in both IG Petrochemicals and Computer Age 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 IG Petrochemicals and Computer Age into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IG Petrochemicals Limited and Computer Age Management, you can compare the effects of market volatilities on IG Petrochemicals and Computer Age 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 IG Petrochemicals with a short position of Computer Age. Check out your portfolio center. Please also check ongoing floating volatility patterns of IG Petrochemicals and Computer Age.
Diversification Opportunities for IG Petrochemicals and Computer Age
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IGPL and Computer is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding IG Petrochemicals Limited and Computer Age Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Age Management and IG Petrochemicals 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 IG Petrochemicals Limited are associated (or correlated) with Computer Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Age Management has no effect on the direction of IG Petrochemicals i.e., IG Petrochemicals and Computer Age go up and down completely randomly.
Pair Corralation between IG Petrochemicals and Computer Age
Assuming the 90 days trading horizon IG Petrochemicals Limited is expected to under-perform the Computer Age. In addition to that, IG Petrochemicals is 1.03 times more volatile than Computer Age Management. It trades about -0.07 of its total potential returns per unit of risk. Computer Age Management is currently generating about 0.0 per unit of volatility. If you would invest 426,053 in Computer Age Management on October 25, 2024 and sell it today you would lose (18,528) from holding Computer Age Management or give up 4.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IG Petrochemicals Limited vs. Computer Age Management
Performance |
| Timeline |
| IG Petrochemicals |
| Computer Age Management |
IG Petrochemicals and Computer Age Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IG Petrochemicals and Computer Age
The main advantage of trading using opposite IG Petrochemicals and Computer Age positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IG Petrochemicals position performs unexpectedly, Computer Age 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 Computer Age will offset losses from the drop in Computer Age's long position.| IG Petrochemicals vs. Baazar Style Retail | IG Petrochemicals vs. Hindustan Copper Limited | IG Petrochemicals vs. Aarti Drugs Limited | IG Petrochemicals vs. Aarey Drugs Pharmaceuticals |
| Computer Age vs. Reliance Industries Limited | Computer Age vs. Life Insurance | Computer Age vs. Oil Natural Gas | Computer Age vs. Indo Borax Chemicals |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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