Correlation Between ICICI Lombard and Aster DM

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

Diversification Opportunities for ICICI Lombard and Aster DM

-0.57

Correlation Coefficient

ICICI Lombard  Aster DM

Excellent diversification

The 3 months correlation between ICICI and Aster is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Lombard General and Aster DM Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aster DM Healthcare 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 Aster DM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aster DM Healthcare has no effect on the direction of ICICI Lombard i.e., ICICI Lombard and Aster DM go up and down completely randomly.

Pair Corralation between ICICI Lombard and Aster DM

Assuming the 90 days trading horizon ICICI Lombard General is expected to under-perform the Aster DM. But the stock apears to be less risky and, when comparing its historical volatility, ICICI Lombard General is 1.33 times less risky than Aster DM. The stock trades about -0.07 of its potential returns per unit of risk. The Aster DM Healthcare is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  43,925  in Aster DM Healthcare on October 6, 2024 and sell it today you would earn a total of  8,210  from holding Aster DM Healthcare or generate 18.69% return on investment over 90 days.

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

ICICI Lombard General  vs.  Aster DM Healthcare

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.

Aster DM Healthcare

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aster DM Healthcare are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Aster DM displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICICI Lombard and Aster DM

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

The idea behind ICICI Lombard General and Aster DM Healthcare 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.