Correlation Between ICICI Lombard and Pritish Nandy

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

Diversification Opportunities for ICICI Lombard and Pritish Nandy

-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between ICICI and Pritish is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Lombard General and Pritish Nandy Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pritish Nandy Commun 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 Pritish Nandy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pritish Nandy Commun has no effect on the direction of ICICI Lombard i.e., ICICI Lombard and Pritish Nandy go up and down completely randomly.

Pair Corralation between ICICI Lombard and Pritish Nandy

Assuming the 90 days trading horizon ICICI Lombard General is expected to generate 0.49 times more return on investment than Pritish Nandy. However, ICICI Lombard General is 2.04 times less risky than Pritish Nandy. It trades about 0.07 of its potential returns per unit of risk. Pritish Nandy Communications is currently generating about -0.32 per unit of risk. If you would invest  190,215  in ICICI Lombard General on October 21, 2024 and sell it today you would earn a total of  4,660  from holding ICICI Lombard General or generate 2.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

ICICI Lombard General  vs.  Pritish Nandy Communications

 Performance 
       Timeline  
ICICI Lombard General 

Risk-Adjusted Performance

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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.
Pritish Nandy Commun 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Pritish Nandy Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ICICI Lombard and Pritish Nandy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ICICI Lombard and Pritish Nandy

The main advantage of trading using opposite ICICI Lombard and Pritish Nandy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICICI Lombard position performs unexpectedly, Pritish Nandy 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 Pritish Nandy will offset losses from the drop in Pritish Nandy's long position.
The idea behind ICICI Lombard General and Pritish Nandy Communications 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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