Correlation Between ICICI Securities and Indraprastha Medical

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

Diversification Opportunities for ICICI Securities and Indraprastha Medical

0.31

Correlation Coefficient

ICICI Securities  Indraprastha Medical

Weak diversification

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

Pair Corralation between ICICI Securities and Indraprastha Medical

Assuming the 90 days trading horizon ICICI Securities is expected to generate 3.61 times less return on investment than Indraprastha Medical. But when comparing it to its historical volatility, ICICI Securities Limited is 1.95 times less risky than Indraprastha Medical. It trades about 0.07 of its potential returns per unit of risk. Indraprastha Medical is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  17,201  in Indraprastha Medical on October 5, 2024 and sell it today you would earn a total of  37,114  from holding Indraprastha Medical or generate 215.77% return on investment over 90 days.

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

ICICI Securities Limited  vs.  Indraprastha Medical

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Indraprastha Medical

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Indraprastha Medical are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Indraprastha Medical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICICI Securities and Indraprastha Medical

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

The idea behind ICICI Securities Limited and Indraprastha Medical 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.