Correlation Between IG Petrochemicals and Transport

Can any of the company-specific risk be diversified away by investing in both IG Petrochemicals and Transport 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 Transport 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 Transport of, you can compare the effects of market volatilities on IG Petrochemicals and Transport 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 Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of IG Petrochemicals and Transport.

Diversification Opportunities for IG Petrochemicals and Transport

0.64

Correlation Coefficient

IG Petrochemicals  Transport

Poor diversification

The 3 months correlation between IGPL and Transport is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding IG Petrochemicals Limited and Transport of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport 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 Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport has no effect on the direction of IG Petrochemicals i.e., IG Petrochemicals and Transport go up and down completely randomly.

Pair Corralation between IG Petrochemicals and Transport

Assuming the 90 days trading horizon IG Petrochemicals is expected to generate 1.19 times less return on investment than Transport. In addition to that, IG Petrochemicals is 1.21 times more volatile than Transport of. It trades about 0.08 of its total potential returns per unit of risk. Transport of is currently generating about 0.12 per unit of volatility. If you would invest  109,050  in Transport of on April 23, 2025 and sell it today you would earn a total of  14,540  from holding Transport of or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

IG Petrochemicals Limited  vs.  Transport of

IG Petrochemicals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IG Petrochemicals Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IG Petrochemicals may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Transport

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transport of are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Transport exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IG Petrochemicals and Transport

The main advantage of trading using opposite IG Petrochemicals and Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IG Petrochemicals position performs unexpectedly, Transport 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 Transport will offset losses from the drop in Transport's long position.

The idea behind IG Petrochemicals Limited and Transport of 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.

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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.