Correlation Between ICICI Lombard and Healthcare Global

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

Diversification Opportunities for ICICI Lombard and Healthcare Global

-0.83

Correlation Coefficient

ICICI Lombard  Healthcare Global

Pay attention - limited upside

The 3 months correlation between ICICI and Healthcare is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Lombard General and Healthcare Global Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Global 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 Healthcare Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Global has no effect on the direction of ICICI Lombard i.e., ICICI Lombard and Healthcare Global go up and down completely randomly.

Pair Corralation between ICICI Lombard and Healthcare Global

Assuming the 90 days trading horizon ICICI Lombard General is expected to under-perform the Healthcare Global. But the stock apears to be less risky and, when comparing its historical volatility, ICICI Lombard General is 1.48 times less risky than Healthcare Global. The stock trades about -0.25 of its potential returns per unit of risk. The Healthcare Global Enterprises is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  39,975  in Healthcare Global Enterprises on September 4, 2024 and sell it today you would earn a total of  10,015  from holding Healthcare Global Enterprises or generate 25.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

ICICI Lombard General  vs.  Healthcare Global Enterprises

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 weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Healthcare Global

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Global Enterprises are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Healthcare Global exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICICI Lombard and Healthcare Global

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

The idea behind ICICI Lombard General and Healthcare Global Enterprises 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.