Correlation Between ICICI Bank and Shaily Engineering

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

Diversification Opportunities for ICICI Bank and Shaily Engineering

0.61

Correlation Coefficient

ICICI Bank  Shaily Engineering

Poor diversification

The 3 months correlation between ICICI and Shaily is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Bank Limited and Shaily Engineering Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaily Engineering 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 Shaily Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaily Engineering has no effect on the direction of ICICI Bank i.e., ICICI Bank and Shaily Engineering go up and down completely randomly.

Pair Corralation between ICICI Bank and Shaily Engineering

Assuming the 90 days trading horizon ICICI Bank Limited is expected to under-perform the Shaily Engineering. But the stock apears to be less risky and, when comparing its historical volatility, ICICI Bank Limited is 5.48 times less risky than Shaily Engineering. The stock trades about -0.03 of its potential returns per unit of risk. The Shaily Engineering Plastics is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  110,220  in Shaily Engineering Plastics on September 27, 2024 and sell it today you would earn a total of  36,825  from holding Shaily Engineering Plastics or generate 33.41% return on investment over 90 days.

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

ICICI Bank Limited  vs.  Shaily Engineering Plastics

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.

Shaily Engineering

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shaily Engineering Plastics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Shaily Engineering sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICICI Bank and Shaily Engineering

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

The idea behind ICICI Bank Limited and Shaily Engineering Plastics 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..