Correlation Between ICICI Bank and Sumeet Industries

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

Diversification Opportunities for ICICI Bank and Sumeet Industries

0.13

Correlation Coefficient

ICICI Bank  Sumeet Industries

Average diversification

The 3 months correlation between ICICI and Sumeet is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Bank Limited and Sumeet Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumeet Industries 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 Sumeet Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumeet Industries has no effect on the direction of ICICI Bank i.e., ICICI Bank and Sumeet Industries go up and down completely randomly.

Pair Corralation between ICICI Bank and Sumeet Industries

If you would invest  125,585  in ICICI Bank Limited on September 22, 2024 and sell it today you would earn a total of  3,255  from holding ICICI Bank Limited or generate 2.59% return on investment over 90 days.

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

ICICI Bank Limited  vs.  Sumeet Industries 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Sumeet Industries

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sumeet Industries Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Sumeet Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICICI Bank and Sumeet Industries

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

The idea behind ICICI Bank Limited and Sumeet Industries 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.