Correlation Between Nordon Indstrias and ICICI Bank

Can any of the company-specific risk be diversified away by investing in both Nordon Indstrias and ICICI Bank 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 Nordon Indstrias and ICICI Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nordon Indstrias Metalrgicas and ICICI Bank Limited, you can compare the effects of market volatilities on Nordon Indstrias and ICICI Bank 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 Nordon Indstrias with a short position of ICICI Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordon Indstrias and ICICI Bank.

Diversification Opportunities for Nordon Indstrias and ICICI Bank

-0.63

Correlation Coefficient

Nordon Indstrias  ICICI Bank

Excellent diversification

The 3 months correlation between Nordon and ICICI is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nordon Indstrias Metalrgicas and ICICI Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICICI Bank Limited and Nordon Indstrias 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 Nordon Indstrias Metalrgicas are associated (or correlated) with ICICI Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICICI Bank Limited has no effect on the direction of Nordon Indstrias i.e., Nordon Indstrias and ICICI Bank go up and down completely randomly.

Pair Corralation between Nordon Indstrias and ICICI Bank

Assuming the 90 days trading horizon Nordon Indstrias Metalrgicas is expected to generate 2.15 times more return on investment than ICICI Bank. However, Nordon Indstrias is 2.15 times more volatile than ICICI Bank Limited. It trades about 0.03 of its potential returns per unit of risk. ICICI Bank Limited is currently generating about -0.48 per unit of risk. If you would invest  600.00  in Nordon Indstrias Metalrgicas on October 25, 2024 and sell it today you would earn a total of  5.00  from holding Nordon Indstrias Metalrgicas or generate 0.83% return on investment over 90 days.

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

Nordon Indstrias Metalrgicas  vs.  ICICI Bank Limited

Nordon Indstrias Met

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordon Indstrias Metalrgicas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

ICICI Bank Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICICI Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, ICICI Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nordon Indstrias and ICICI Bank

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

The idea behind Nordon Indstrias Metalrgicas and ICICI Bank 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.