Correlation Between Chia and ICICI Bank

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

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

Diversification Opportunities for Chia and ICICI Bank

0.58

Correlation Coefficient

Chia  ICICI Bank

Very weak diversification

The 3 months correlation between Chia and ICICI is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Chia 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 Chia 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 Chia 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 Chia i.e., Chia and ICICI Bank go up and down completely randomly.

Pair Corralation between Chia and ICICI Bank

Assuming the 90 days trading horizon Chia is expected to generate 4.33 times more return on investment than ICICI Bank. However, Chia is 4.33 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 -0.37 per unit of risk. If you would invest  2,127  in Chia on October 26, 2024 and sell it today you would lose (181.00) from holding Chia or give up 8.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.71%
Values	Daily Returns

Chia  vs.  ICICI Bank Limited

Chia

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chia are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Chia exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 latest fragile performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Chia and ICICI Bank

The main advantage of trading using opposite Chia and ICICI Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia 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 Chia 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.