Correlation Between Grupo Mxico and ICICI Bank

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

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

Diversification Opportunities for Grupo Mxico and ICICI Bank

0.27

Correlation Coefficient

Grupo Mxico  ICICI Bank

Modest diversification

The 3 months correlation between Grupo and ICICI is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Mxico SAB 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 Grupo Mxico 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 Grupo Mxico SAB 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 Grupo Mxico i.e., Grupo Mxico and ICICI Bank go up and down completely randomly.

Pair Corralation between Grupo Mxico and ICICI Bank

Assuming the 90 days horizon Grupo Mxico SAB is expected to generate 1.55 times more return on investment than ICICI Bank. However, Grupo Mxico is 1.55 times more volatile than ICICI Bank Limited. It trades about 0.05 of its potential returns per unit of risk. ICICI Bank Limited is currently generating about -0.01 per unit of risk. If you would invest  461.00  in Grupo Mxico SAB on December 26, 2024 and sell it today you would earn a total of  24.00  from holding Grupo Mxico SAB or generate 5.21% return on investment over 90 days.

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

Grupo Mxico SAB  vs.  ICICI Bank Limited

Grupo Mxico SAB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Mxico SAB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Grupo Mxico may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ICICI Bank Limited

Risk-Adjusted Performance

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 nearly stable fundamental drivers, ICICI Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Grupo Mxico and ICICI Bank

The main advantage of trading using opposite Grupo Mxico and ICICI Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Mxico 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 Grupo Mxico SAB 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.