Correlation Between ICICI Bank and Mindteck

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

Diversification Opportunities for ICICI Bank and Mindteck

0.43

Correlation Coefficient

ICICI Bank  Mindteck

Very weak diversification

The 3 months correlation between ICICI and Mindteck is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Bank Limited and Mindteck Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mindteck Limited 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 Mindteck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mindteck Limited has no effect on the direction of ICICI Bank i.e., ICICI Bank and Mindteck go up and down completely randomly.

Pair Corralation between ICICI Bank and Mindteck

Assuming the 90 days trading horizon ICICI Bank Limited is expected to generate 0.37 times more return on investment than Mindteck. However, ICICI Bank Limited is 2.72 times less risky than Mindteck. It trades about 0.06 of its potential returns per unit of risk. Mindteck Limited is currently generating about -0.05 per unit of risk. If you would invest  128,560  in ICICI Bank Limited on September 18, 2024 and sell it today you would earn a total of  6,050  from holding ICICI Bank Limited or generate 4.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

ICICI Bank Limited  vs.  Mindteck Limited

ICICI Bank Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ICICI Bank Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ICICI Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Mindteck Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mindteck Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with ICICI Bank and Mindteck

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

The idea behind ICICI Bank Limited and Mindteck Limited 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.