Correlation Between ICICI Bank and Grupo Financiero

Can any of the company-specific risk be diversified away by investing in both ICICI Bank and Grupo Financiero 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 ICICI Bank and Grupo Financiero into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ICICI Bank Limited and Grupo Financiero Inbursa, you can compare the effects of market volatilities on ICICI Bank and Grupo Financiero 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 ICICI Bank with a short position of Grupo Financiero. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICICI Bank and Grupo Financiero.

Diversification Opportunities for ICICI Bank and Grupo Financiero

-0.37

Correlation Coefficient

ICICI Bank  Grupo Financiero

Very good diversification

The 3 months correlation between ICICI and Grupo is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Bank Limited and Grupo Financiero Inbursa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Inbursa and ICICI Bank 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 ICICI Bank Limited are associated (or correlated) with Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Inbursa has no effect on the direction of ICICI Bank i.e., ICICI Bank and Grupo Financiero go up and down completely randomly.

Pair Corralation between ICICI Bank and Grupo Financiero

Considering the 90-day investment horizon ICICI Bank Limited is expected to generate 0.69 times more return on investment than Grupo Financiero. However, ICICI Bank Limited is 1.45 times less risky than Grupo Financiero. It trades about 0.08 of its potential returns per unit of risk. Grupo Financiero Inbursa is currently generating about -0.01 per unit of risk. If you would invest  2,392  in ICICI Bank Limited on September 3, 2024 and sell it today you would earn a total of  663.00  from holding ICICI Bank Limited or generate 27.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

ICICI Bank Limited  vs.  Grupo Financiero Inbursa

ICICI Bank Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICICI Bank Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, ICICI Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Grupo Financiero Inbursa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Financiero Inbursa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ICICI Bank and Grupo Financiero

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

The idea behind ICICI Bank Limited and Grupo Financiero Inbursa 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.