Correlation Between ICICI Bank and SHINHAN FINL
Can any of the company-specific risk be diversified away by investing in both ICICI Bank and SHINHAN FINL 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 Bank and SHINHAN FINL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICICI Bank Limited and SHINHAN FINL ADR1, you can compare the effects of market volatilities on ICICI Bank and SHINHAN FINL 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 Bank with a short position of SHINHAN FINL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICICI Bank and SHINHAN FINL.
Diversification Opportunities for ICICI Bank and SHINHAN FINL
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ICICI and SHINHAN is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Bank Limited and SHINHAN FINL ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHINHAN FINL ADR1 and ICICI Bank 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 Bank Limited are associated (or correlated) with SHINHAN FINL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHINHAN FINL ADR1 has no effect on the direction of ICICI Bank i.e., ICICI Bank and SHINHAN FINL go up and down completely randomly.
Pair Corralation between ICICI Bank and SHINHAN FINL
Assuming the 90 days trading horizon ICICI Bank Limited is expected to generate 0.82 times more return on investment than SHINHAN FINL. However, ICICI Bank Limited is 1.23 times less risky than SHINHAN FINL. It trades about 0.05 of its potential returns per unit of risk. SHINHAN FINL ADR1 is currently generating about 0.04 per unit of risk. If you would invest 2,003 in ICICI Bank Limited on September 25, 2024 and sell it today you would earn a total of 937.00 from holding ICICI Bank Limited or generate 46.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ICICI Bank Limited vs. SHINHAN FINL ADR1
Performance |
Timeline |
ICICI Bank Limited |
SHINHAN FINL ADR1 |
ICICI Bank and SHINHAN FINL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ICICI Bank and SHINHAN FINL
The main advantage of trading using opposite ICICI Bank and SHINHAN FINL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICICI Bank position performs unexpectedly, SHINHAN FINL 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 SHINHAN FINL will offset losses from the drop in SHINHAN FINL's long position.ICICI Bank vs. China Merchants Bank | ICICI Bank vs. HDFC Bank Limited | ICICI Bank vs. PT Bank Central | ICICI Bank vs. DBS Group Holdings |
SHINHAN FINL vs. China Merchants Bank | SHINHAN FINL vs. HDFC Bank Limited | SHINHAN FINL vs. ICICI Bank Limited | SHINHAN FINL vs. PT Bank Central |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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