Correlation Between ICICI Lombard and Industrial Investment

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

Diversification Opportunities for ICICI Lombard and Industrial Investment

-0.86

Correlation Coefficient

ICICI Lombard  Industrial Investment

Pay attention - limited upside

The 3 months correlation between ICICI and Industrial is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Lombard General and Industrial Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Investment 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 Industrial Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Investment has no effect on the direction of ICICI Lombard i.e., ICICI Lombard and Industrial Investment go up and down completely randomly.

Pair Corralation between ICICI Lombard and Industrial Investment

Assuming the 90 days trading horizon ICICI Lombard General is expected to under-perform the Industrial Investment. But the stock apears to be less risky and, when comparing its historical volatility, ICICI Lombard General is 2.23 times less risky than Industrial Investment. The stock trades about -0.12 of its potential returns per unit of risk. The Industrial Investment Trust is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  32,200  in Industrial Investment Trust on August 31, 2024 and sell it today you would earn a total of  6,545  from holding Industrial Investment Trust or generate 20.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

ICICI Lombard General  vs.  Industrial Investment Trust

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 inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Industrial Investment

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Industrial Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICICI Lombard and Industrial Investment

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

The idea behind ICICI Lombard General and Industrial Investment Trust 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.