Correlation Between ICICI Securities and Lakshmi Finance

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

Diversification Opportunities for ICICI Securities and Lakshmi Finance

0.15

Correlation Coefficient

ICICI Securities  Lakshmi Finance

Average diversification

The 3 months correlation between ICICI and Lakshmi is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Securities Limited and Lakshmi Finance Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakshmi Finance Indu 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 Lakshmi Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakshmi Finance Indu has no effect on the direction of ICICI Securities i.e., ICICI Securities and Lakshmi Finance go up and down completely randomly.

Pair Corralation between ICICI Securities and Lakshmi Finance

Assuming the 90 days trading horizon ICICI Securities is expected to generate 1.55 times less return on investment than Lakshmi Finance. But when comparing it to its historical volatility, ICICI Securities Limited is 2.36 times less risky than Lakshmi Finance. It trades about 0.1 of its potential returns per unit of risk. Lakshmi Finance Industrial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  10,255  in Lakshmi Finance Industrial on October 5, 2024 and sell it today you would earn a total of  13,319  from holding Lakshmi Finance Industrial or generate 129.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.78%
Values	Daily Returns

ICICI Securities Limited  vs.  Lakshmi Finance Industrial

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.

Lakshmi Finance Indu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lakshmi Finance Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ICICI Securities and Lakshmi Finance

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

The idea behind ICICI Securities Limited and Lakshmi Finance Industrial 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.