Correlation Between ICICI Lombard and Apollo Hospitals

Can any of the company-specific risk be diversified away by investing in both ICICI Lombard and Apollo Hospitals 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 Lombard and Apollo Hospitals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ICICI Lombard General and Apollo Hospitals Enterprise, you can compare the effects of market volatilities on ICICI Lombard and Apollo Hospitals 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 Lombard with a short position of Apollo Hospitals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICICI Lombard and Apollo Hospitals.

Diversification Opportunities for ICICI Lombard and Apollo Hospitals

-0.15

Correlation Coefficient

ICICI Lombard  Apollo Hospitals

Good diversification

The 3 months correlation between ICICI and Apollo is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Lombard General and Apollo Hospitals Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Hospitals Ent and ICICI Lombard 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 Lombard General are associated (or correlated) with Apollo Hospitals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Hospitals Ent has no effect on the direction of ICICI Lombard i.e., ICICI Lombard and Apollo Hospitals go up and down completely randomly.

Pair Corralation between ICICI Lombard and Apollo Hospitals

Assuming the 90 days trading horizon ICICI Lombard is expected to generate 1.09 times less return on investment than Apollo Hospitals. In addition to that, ICICI Lombard is 1.04 times more volatile than Apollo Hospitals Enterprise. It trades about 0.08 of its total potential returns per unit of risk. Apollo Hospitals Enterprise is currently generating about 0.09 per unit of volatility. If you would invest  424,501  in Apollo Hospitals Enterprise on October 6, 2024 and sell it today you would earn a total of  305,334  from holding Apollo Hospitals Enterprise or generate 71.93% return on investment over 90 days.

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

ICICI Lombard General  vs.  Apollo Hospitals Enterprise

ICICI Lombard General

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICICI Lombard General has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Apollo Hospitals Ent

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Hospitals Enterprise are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Apollo Hospitals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ICICI Lombard and Apollo Hospitals

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

The idea behind ICICI Lombard General and Apollo Hospitals Enterprise 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.