Correlation Between ICICI Securities and KEC International

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

Diversification Opportunities for ICICI Securities and KEC International

0.56

Correlation Coefficient

ICICI Securities  KEC International

Very weak diversification

The 3 months correlation between ICICI and KEC is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Securities Limited and KEC International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEC International 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 KEC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEC International has no effect on the direction of ICICI Securities i.e., ICICI Securities and KEC International go up and down completely randomly.

Pair Corralation between ICICI Securities and KEC International

Assuming the 90 days trading horizon ICICI Securities Limited is expected to generate 0.34 times more return on investment than KEC International. However, ICICI Securities Limited is 2.97 times less risky than KEC International. It trades about 0.06 of its potential returns per unit of risk. KEC International Limited is currently generating about -0.17 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	Weak
Accuracy	93.65%
Values	Daily Returns

ICICI Securities Limited  vs.  KEC International Limited

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.

KEC International

Risk-Adjusted Performance

Very Weak

Over the last 90 days KEC International Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile 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 KEC International

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

The idea behind ICICI Securities Limited and KEC International Limited 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.