Correlation Between ICICI Bank and Aptech

Can any of the company-specific risk be diversified away by investing in both ICICI Bank and Aptech 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 Aptech 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 Aptech Limited, you can compare the effects of market volatilities on ICICI Bank and Aptech 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 Aptech. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICICI Bank and Aptech.

Diversification Opportunities for ICICI Bank and Aptech

-0.07

Correlation Coefficient

ICICI Bank  Aptech

Good diversification

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

Pair Corralation between ICICI Bank and Aptech

Assuming the 90 days trading horizon ICICI Bank Limited is expected to under-perform the Aptech. But the stock apears to be less risky and, when comparing its historical volatility, ICICI Bank Limited is 3.66 times less risky than Aptech. The stock trades about -0.02 of its potential returns per unit of risk. The Aptech Limited is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  16,424  in Aptech Limited on September 24, 2024 and sell it today you would earn a total of  2,677  from holding Aptech Limited or generate 16.3% return on investment over 90 days.

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

ICICI Bank Limited  vs.  Aptech Limited

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.

Aptech Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ICICI Bank and Aptech

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

The idea behind ICICI Bank Limited and Aptech 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.