Correlation Between ICICI Securities and Sarveshwar Foods

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

Diversification Opportunities for ICICI Securities and Sarveshwar Foods

0.46

Correlation Coefficient

ICICI Securities  Sarveshwar Foods

Very weak diversification

The 3 months correlation between ICICI and Sarveshwar is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Securities Limited and Sarveshwar Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarveshwar Foods 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 Sarveshwar Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarveshwar Foods has no effect on the direction of ICICI Securities i.e., ICICI Securities and Sarveshwar Foods go up and down completely randomly.

Pair Corralation between ICICI Securities and Sarveshwar Foods

Assuming the 90 days trading horizon ICICI Securities Limited is expected to generate 0.37 times more return on investment than Sarveshwar Foods. However, ICICI Securities Limited is 2.71 times less risky than Sarveshwar Foods. It trades about -0.07 of its potential returns per unit of risk. Sarveshwar Foods Limited is currently generating about -0.08 per unit of risk. If you would invest  86,750  in ICICI Securities Limited on October 7, 2024 and sell it today you would lose (2,950) from holding ICICI Securities Limited or give up 3.4% of portfolio value over 90 days.

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

ICICI Securities Limited  vs.  Sarveshwar Foods Limited

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

Sarveshwar Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sarveshwar Foods Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with ICICI Securities and Sarveshwar Foods

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

The idea behind ICICI Securities Limited and Sarveshwar Foods 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 Stocks Directory module to find actively traded stocks across global markets.