Correlation Between ICICI Lombard and Azad Engineering

Can any of the company-specific risk be diversified away by investing in both ICICI Lombard and Azad 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 Lombard and Azad Engineering 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 Azad Engineering Limited, you can compare the effects of market volatilities on ICICI Lombard and Azad 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 Lombard with a short position of Azad Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICICI Lombard and Azad Engineering.

Diversification Opportunities for ICICI Lombard and Azad Engineering

0.0

Correlation Coefficient

ICICI Lombard  Azad Engineering

Pay attention - limited upside

The 3 months correlation between ICICI and Azad is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Lombard General and Azad Engineering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azad Engineering 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 Azad Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azad Engineering has no effect on the direction of ICICI Lombard i.e., ICICI Lombard and Azad Engineering go up and down completely randomly.

Pair Corralation between ICICI Lombard and Azad Engineering

If you would invest (100.00) in Azad Engineering Limited on October 25, 2024 and sell it today you would earn a total of  100.00  from holding Azad Engineering Limited or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ICICI Lombard General  vs.  Azad Engineering Limited

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 fairly strong forward indicators, ICICI Lombard is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Azad Engineering

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Azad Engineering Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Azad Engineering is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ICICI Lombard and Azad Engineering

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

The idea behind ICICI Lombard General and Azad Engineering 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.