Correlation Between ICICI Securities and Rainbow Childrens

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

Diversification Opportunities for ICICI Securities and Rainbow Childrens

0.26

Correlation Coefficient

ICICI Securities  Rainbow Childrens

Modest diversification

The 3 months correlation between ICICI and Rainbow is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Securities Limited and Rainbow Childrens Medicare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rainbow Childrens 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 Rainbow Childrens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rainbow Childrens has no effect on the direction of ICICI Securities i.e., ICICI Securities and Rainbow Childrens go up and down completely randomly.

Pair Corralation between ICICI Securities and Rainbow Childrens

Assuming the 90 days trading horizon ICICI Securities is expected to generate 1.32 times less return on investment than Rainbow Childrens. But when comparing it to its historical volatility, ICICI Securities Limited is 1.42 times less risky than Rainbow Childrens. It trades about 0.07 of its potential returns per unit of risk. Rainbow Childrens Medicare is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  104,644  in Rainbow Childrens Medicare on October 5, 2024 and sell it today you would earn a total of  51,136  from holding Rainbow Childrens Medicare or generate 48.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.34%
Values	Daily Returns

ICICI Securities Limited  vs.  Rainbow Childrens Medicare

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.

Rainbow Childrens

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rainbow Childrens Medicare are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental drivers, Rainbow Childrens showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICICI Securities and Rainbow Childrens

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

The idea behind ICICI Securities Limited and Rainbow Childrens Medicare 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.