Correlation Between Industrial Investment and ICICI Securities

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

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

Diversification Opportunities for Industrial Investment and ICICI Securities

0.03

Correlation Coefficient

Industrial Investment  ICICI Securities

Significant diversification

The 3 months correlation between Industrial and ICICI is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and ICICI Securities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICICI Securities and Industrial Investment 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 Industrial Investment Trust are associated (or correlated) with ICICI Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICICI Securities has no effect on the direction of Industrial Investment i.e., Industrial Investment and ICICI Securities go up and down completely randomly.

Pair Corralation between Industrial Investment and ICICI Securities

Assuming the 90 days trading horizon Industrial Investment Trust is expected to generate 1.54 times more return on investment than ICICI Securities. However, Industrial Investment is 1.54 times more volatile than ICICI Securities Limited. It trades about 0.35 of its potential returns per unit of risk. ICICI Securities Limited is currently generating about 0.06 per unit of risk. If you would invest  26,375  in Industrial Investment Trust on September 2, 2024 and sell it today you would earn a total of  14,305  from holding Industrial Investment Trust or generate 54.24% return on investment over 90 days.

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

Industrial Investment Trust  vs.  ICICI Securities Limited

Industrial Investment

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Industrial Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

ICICI Securities

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICICI Securities Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ICICI Securities is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Industrial Investment and ICICI Securities

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

The idea behind Industrial Investment Trust and ICICI Securities 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.