Correlation Between Tera Software and IG Petrochemicals
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By analyzing existing cross correlation between Tera Software Limited and IG Petrochemicals Limited, you can compare the effects of market volatilities on Tera Software 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 Tera Software with a short position of IG Petrochemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tera Software and IG Petrochemicals.
Diversification Opportunities for Tera Software and IG Petrochemicals
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tera and IGPL is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Tera Software Limited and IG Petrochemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IG Petrochemicals and Tera Software 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 Tera Software Limited 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 Tera Software i.e., Tera Software and IG Petrochemicals go up and down completely randomly.
Pair Corralation between Tera Software and IG Petrochemicals
Assuming the 90 days trading horizon Tera Software Limited is expected to generate 1.21 times more return on investment than IG Petrochemicals. However, Tera Software is 1.21 times more volatile than IG Petrochemicals Limited. It trades about 0.27 of its potential returns per unit of risk. IG Petrochemicals Limited is currently generating about -0.32 per unit of risk. If you would invest 19,654 in Tera Software Limited on October 25, 2024 and sell it today you would earn a total of 3,542 from holding Tera Software Limited or generate 18.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tera Software Limited vs. IG Petrochemicals Limited
Performance |
| Timeline |
| Tera Software Limited |
| IG Petrochemicals |
Tera Software and IG Petrochemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tera Software and IG Petrochemicals
The main advantage of trading using opposite Tera Software and IG Petrochemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tera Software 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.| Tera Software vs. Reliance Industries Limited | Tera Software vs. Life Insurance | Tera Software vs. Oil Natural Gas | Tera Software vs. Indo Borax Chemicals |
| IG Petrochemicals vs. Baazar Style Retail | IG Petrochemicals vs. Hindustan Copper Limited | IG Petrochemicals vs. Aarti Drugs Limited | IG Petrochemicals vs. Aarey Drugs Pharmaceuticals |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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