Correlation Between ICICI Bank and Punjab Sind

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

Diversification Opportunities for ICICI Bank and Punjab Sind

0.24

Correlation Coefficient

ICICI Bank  Punjab Sind

Modest diversification

The 3 months correlation between ICICI and Punjab is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Bank Limited and Punjab Sind Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Punjab Sind Bank 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 Punjab Sind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Punjab Sind Bank has no effect on the direction of ICICI Bank i.e., ICICI Bank and Punjab Sind go up and down completely randomly.

Pair Corralation between ICICI Bank and Punjab Sind

Assuming the 90 days trading horizon ICICI Bank Limited is expected to generate 0.61 times more return on investment than Punjab Sind. However, ICICI Bank Limited is 1.65 times less risky than Punjab Sind. It trades about -0.18 of its potential returns per unit of risk. Punjab Sind Bank is currently generating about -0.45 per unit of risk. If you would invest  132,350  in ICICI Bank Limited on October 10, 2024 and sell it today you would lose (4,425) from holding ICICI Bank Limited or give up 3.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

ICICI Bank Limited  vs.  Punjab Sind Bank

ICICI Bank Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICICI Bank Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Punjab Sind Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Punjab Sind Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with ICICI Bank and Punjab Sind

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

The idea behind ICICI Bank Limited and Punjab Sind Bank 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.