Correlation Between ICICI Bank and Genus Power

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

Diversification Opportunities for ICICI Bank and Genus Power

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ICICI and Genus is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Bank Limited and Genus Power Infrastructures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genus Power Infrastr 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 Genus Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genus Power Infrastr has no effect on the direction of ICICI Bank i.e., ICICI Bank and Genus Power go up and down completely randomly.

Pair Corralation between ICICI Bank and Genus Power

Assuming the 90 days trading horizon ICICI Bank Limited is expected to generate 0.48 times more return on investment than Genus Power. However, ICICI Bank Limited is 2.08 times less risky than Genus Power. It trades about -0.03 of its potential returns per unit of risk. Genus Power Infrastructures is currently generating about -0.04 per unit of risk. If you would invest  132,200  in ICICI Bank Limited on September 23, 2024 and sell it today you would lose (3,360) from holding ICICI Bank Limited or give up 2.54% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.44%
ValuesDaily Returns

ICICI Bank Limited  vs.  Genus Power Infrastructures

 Performance 
       Timeline  
ICICI Bank Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ICICI Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ICICI Bank is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Genus Power Infrastr 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Genus Power Infrastructures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Genus Power is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

ICICI Bank and Genus Power Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ICICI Bank and Genus Power

The main advantage of trading using opposite ICICI Bank and Genus Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICICI Bank position performs unexpectedly, Genus Power 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 Genus Power will offset losses from the drop in Genus Power's long position.
The idea behind ICICI Bank Limited and Genus Power Infrastructures 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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