Correlation Between ICICI Lombard and Motilal Oswal

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

Diversification Opportunities for ICICI Lombard and Motilal Oswal

0.69

Correlation Coefficient

ICICI Lombard  Motilal Oswal

Poor diversification

The 3 months correlation between ICICI and Motilal is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Lombard General and Motilal Oswal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motilal Oswal Financial 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 Motilal Oswal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motilal Oswal Financial has no effect on the direction of ICICI Lombard i.e., ICICI Lombard and Motilal Oswal go up and down completely randomly.

Pair Corralation between ICICI Lombard and Motilal Oswal

Assuming the 90 days trading horizon ICICI Lombard General is expected to generate 0.49 times more return on investment than Motilal Oswal. However, ICICI Lombard General is 2.04 times less risky than Motilal Oswal. It trades about -0.09 of its potential returns per unit of risk. Motilal Oswal Financial is currently generating about -0.2 per unit of risk. If you would invest  186,185  in ICICI Lombard General on November 29, 2024 and sell it today you would lose (17,410) from holding ICICI Lombard General or give up 9.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

ICICI Lombard General  vs.  Motilal Oswal Financial

ICICI Lombard General

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Motilal Oswal Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Motilal Oswal Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with ICICI Lombard and Motilal Oswal

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

The idea behind ICICI Lombard General and Motilal Oswal Financial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.