Correlation Between Pilani Investment and ICICI Bank

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

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

Diversification Opportunities for Pilani Investment and ICICI Bank

0.07

Correlation Coefficient

Pilani Investment  ICICI Bank

Significant diversification

The 3 months correlation between Pilani and ICICI is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Pilani Investment and and ICICI Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICICI Bank Limited and Pilani 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 Pilani Investment and are associated (or correlated) with ICICI Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICICI Bank Limited has no effect on the direction of Pilani Investment i.e., Pilani Investment and ICICI Bank go up and down completely randomly.

Pair Corralation between Pilani Investment and ICICI Bank

Assuming the 90 days trading horizon Pilani Investment and is expected to generate 2.57 times more return on investment than ICICI Bank. However, Pilani Investment is 2.57 times more volatile than ICICI Bank Limited. It trades about 0.09 of its potential returns per unit of risk. ICICI Bank Limited is currently generating about 0.1 per unit of risk. If you would invest  316,143  in Pilani Investment and on September 20, 2024 and sell it today you would earn a total of  265,492  from holding Pilani Investment and or generate 83.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Pilani Investment and  vs.  ICICI Bank Limited

Pilani Investment

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pilani Investment and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Pilani Investment demonstrated solid returns over the last few months and may actually be approaching a breakup point.

ICICI Bank Limited

Risk-Adjusted Performance

0 of 100

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pilani Investment and ICICI Bank

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

The idea behind Pilani Investment and and ICICI Bank 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.