Correlation Between ICICI Lombard and Central Bank

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

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

Diversification Opportunities for ICICI Lombard and Central Bank

0.74

Correlation Coefficient

ICICI Lombard  Central Bank

Poor diversification

The 3 months correlation between ICICI and Central is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Lombard General and Central Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Bank and ICICI Lombard 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 Lombard General are associated (or correlated) with Central Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Bank has no effect on the direction of ICICI Lombard i.e., ICICI Lombard and Central Bank go up and down completely randomly.

Pair Corralation between ICICI Lombard and Central Bank

Assuming the 90 days trading horizon ICICI Lombard General is expected to under-perform the Central Bank. But the stock apears to be less risky and, when comparing its historical volatility, ICICI Lombard General is 1.95 times less risky than Central Bank. The stock trades about -0.19 of its potential returns per unit of risk. The Central Bank of is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  6,076  in Central Bank of on September 1, 2024 and sell it today you would lose (484.00) from holding Central Bank of or give up 7.97% of portfolio value over 90 days.

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

ICICI Lombard General  vs.  Central Bank of

ICICI Lombard General

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICICI Lombard General has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Central Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Central Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with ICICI Lombard and Central Bank

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

The idea behind ICICI Lombard General and Central Bank 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..