Correlation Between Apple and ICICI Bank

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

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

Diversification Opportunities for Apple and ICICI Bank

0.67

Correlation Coefficient

Apple  ICICI Bank

Poor diversification

The 3 months correlation between Apple and ICICI is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and ICICI Bank go up and down completely randomly.

Pair Corralation between Apple and ICICI Bank

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.81 times more return on investment than ICICI Bank. However, Apple Inc is 1.24 times less risky than ICICI Bank. It trades about 0.1 of its potential returns per unit of risk. ICICI Bank Limited is currently generating about 0.07 per unit of risk. If you would invest  16,769  in Apple Inc on October 10, 2024 and sell it today you would earn a total of  6,716  from holding Apple Inc or generate 40.05% return on investment over 90 days.

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

Apple Inc  vs.  ICICI Bank Limited

Apple Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

ICICI Bank Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICICI Bank Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, ICICI Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Apple and ICICI Bank

The main advantage of trading using opposite Apple and ICICI Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.