Correlation Between ICICI Lombard and Kalyani Investment

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

Diversification Opportunities for ICICI Lombard and Kalyani Investment

0.01

Correlation Coefficient

ICICI Lombard  Kalyani Investment

Significant diversification

The 3 months correlation between ICICI and Kalyani is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Lombard General and Kalyani Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalyani 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 Kalyani Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalyani Investment has no effect on the direction of ICICI Lombard i.e., ICICI Lombard and Kalyani Investment go up and down completely randomly.

Pair Corralation between ICICI Lombard and Kalyani Investment

Assuming the 90 days trading horizon ICICI Lombard is expected to generate 2.87 times less return on investment than Kalyani Investment. But when comparing it to its historical volatility, ICICI Lombard General is 1.89 times less risky than Kalyani Investment. It trades about 0.06 of its potential returns per unit of risk. Kalyani Investment is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  200,275  in Kalyani Investment on October 5, 2024 and sell it today you would earn a total of  405,195  from holding Kalyani Investment or generate 202.32% return on investment over 90 days.

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

ICICI Lombard General  vs.  Kalyani Investment

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 unfluctuating 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.

Kalyani Investment

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kalyani Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Kalyani Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ICICI Lombard and Kalyani Investment

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

The idea behind ICICI Lombard General and Kalyani Investment 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.

Check out your portfolio center.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.