Correlation Between ICICI Lombard and Ratnamani Metals

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

Diversification Opportunities for ICICI Lombard and Ratnamani Metals

0.31

Correlation Coefficient

ICICI Lombard  Ratnamani Metals

Weak diversification

The 3 months correlation between ICICI and Ratnamani is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Lombard General and Ratnamani Metals Tubes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratnamani Metals Tubes 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 Ratnamani Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratnamani Metals Tubes has no effect on the direction of ICICI Lombard i.e., ICICI Lombard and Ratnamani Metals go up and down completely randomly.

Pair Corralation between ICICI Lombard and Ratnamani Metals

Assuming the 90 days trading horizon ICICI Lombard General is expected to generate 1.0 times more return on investment than Ratnamani Metals. However, ICICI Lombard General is 1.0 times less risky than Ratnamani Metals. It trades about -0.04 of its potential returns per unit of risk. Ratnamani Metals Tubes is currently generating about -0.17 per unit of risk. If you would invest  192,915  in ICICI Lombard General on October 25, 2024 and sell it today you would lose (7,925) from holding ICICI Lombard General or give up 4.11% of portfolio value over 90 days.

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

ICICI Lombard General  vs.  Ratnamani Metals Tubes

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.

Ratnamani Metals Tubes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ratnamani Metals Tubes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ICICI Lombard and Ratnamani Metals

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

The idea behind ICICI Lombard General and Ratnamani Metals Tubes 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.