Correlation Between ICICI Securities and Associated Alcohols

Can any of the company-specific risk be diversified away by investing in both ICICI Securities and Associated Alcohols 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 Securities and Associated Alcohols into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ICICI Securities Limited and Associated Alcohols Breweries, you can compare the effects of market volatilities on ICICI Securities and Associated Alcohols 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 Securities with a short position of Associated Alcohols. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICICI Securities and Associated Alcohols.

Diversification Opportunities for ICICI Securities and Associated Alcohols

-0.03

Correlation Coefficient

ICICI Securities  Associated Alcohols

Good diversification

The 3 months correlation between ICICI and Associated is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Securities Limited and Associated Alcohols Breweries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Alcohols and ICICI Securities 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 Securities Limited are associated (or correlated) with Associated Alcohols. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Alcohols has no effect on the direction of ICICI Securities i.e., ICICI Securities and Associated Alcohols go up and down completely randomly.

Pair Corralation between ICICI Securities and Associated Alcohols

Assuming the 90 days trading horizon ICICI Securities Limited is expected to under-perform the Associated Alcohols. But the stock apears to be less risky and, when comparing its historical volatility, ICICI Securities Limited is 2.62 times less risky than Associated Alcohols. The stock trades about -0.05 of its potential returns per unit of risk. The Associated Alcohols Breweries is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  89,375  in Associated Alcohols Breweries on October 22, 2024 and sell it today you would earn a total of  25,850  from holding Associated Alcohols Breweries or generate 28.92% return on investment over 90 days.

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

ICICI Securities Limited  vs.  Associated Alcohols Breweries

ICICI Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICICI Securities Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ICICI Securities is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Associated Alcohols

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Alcohols Breweries are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Associated Alcohols reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICICI Securities and Associated Alcohols

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

The idea behind ICICI Securities Limited and Associated Alcohols Breweries 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.