Correlation Between ICICI Securities and ILFS Investment

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

Diversification Opportunities for ICICI Securities and ILFS Investment

0.06

Correlation Coefficient

ICICI Securities  ILFS Investment

Significant diversification

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

Pair Corralation between ICICI Securities and ILFS Investment

Assuming the 90 days trading horizon ICICI Securities Limited is expected to generate 0.53 times more return on investment than ILFS Investment. However, ICICI Securities Limited is 1.88 times less risky than ILFS Investment. It trades about 0.06 of its potential returns per unit of risk. ILFS Investment Managers is currently generating about -0.13 per unit of risk. If you would invest  86,365  in ICICI Securities Limited on December 30, 2024 and sell it today you would earn a total of  3,255  from holding ICICI Securities Limited or generate 3.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

ICICI Securities Limited  vs.  ILFS Investment Managers

ICICI Securities

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICICI Securities Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ICICI Securities is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ILFS Investment Managers

Risk-Adjusted Performance

Very Weak

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

Pair Trading with ICICI Securities and ILFS Investment

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

The idea behind ICICI Securities Limited and ILFS Investment Managers 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.