Correlation Between Rajnandini Metal and IG Petrochemicals
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By analyzing existing cross correlation between Rajnandini Metal Limited and IG Petrochemicals Limited, you can compare the effects of market volatilities on Rajnandini Metal 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 Rajnandini Metal with a short position of IG Petrochemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rajnandini Metal and IG Petrochemicals.
Diversification Opportunities for Rajnandini Metal and IG Petrochemicals
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rajnandini and IGPL is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Rajnandini Metal 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 Rajnandini Metal 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 Rajnandini Metal 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 Rajnandini Metal i.e., Rajnandini Metal and IG Petrochemicals go up and down completely randomly.
Pair Corralation between Rajnandini Metal and IG Petrochemicals
Assuming the 90 days trading horizon Rajnandini Metal Limited is expected to under-perform the IG Petrochemicals. But the stock apears to be less risky and, when comparing its historical volatility, Rajnandini Metal Limited is 1.17 times less risky than IG Petrochemicals. The stock trades about -0.11 of its potential returns per unit of risk. The IG Petrochemicals Limited is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 59,220 in IG Petrochemicals Limited on September 26, 2024 and sell it today you would lose (3,230) from holding IG Petrochemicals Limited or give up 5.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Rajnandini Metal Limited vs. IG Petrochemicals Limited
Performance |
Timeline |
Rajnandini Metal |
IG Petrochemicals |
Rajnandini Metal and IG Petrochemicals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rajnandini Metal and IG Petrochemicals
The main advantage of trading using opposite Rajnandini Metal and IG Petrochemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rajnandini Metal 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.Rajnandini Metal vs. Apollo Hospitals Enterprise | Rajnandini Metal vs. Healthcare Global Enterprises | Rajnandini Metal vs. Yatharth Hospital Trauma | Rajnandini Metal vs. Sandhar Technologies Limited |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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