Correlation Between BANK RAKYAT and ICICI Bank
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT 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 BANK RAKYAT and ICICI Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK RAKYAT IND and ICICI Bank Limited, you can compare the effects of market volatilities on BANK RAKYAT 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 BANK RAKYAT with a short position of ICICI Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and ICICI Bank.
Diversification Opportunities for BANK RAKYAT and ICICI Bank
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between BANK and ICICI is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND 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 BANK RAKYAT 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 BANK RAKYAT IND 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 BANK RAKYAT i.e., BANK RAKYAT and ICICI Bank go up and down completely randomly.
Pair Corralation between BANK RAKYAT and ICICI Bank
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the ICICI Bank. In addition to that, BANK RAKYAT is 1.59 times more volatile than ICICI Bank Limited. It trades about -0.09 of its total potential returns per unit of risk. ICICI Bank Limited is currently generating about 0.0 per unit of volatility. If you would invest 2,800 in ICICI Bank Limited on November 1, 2024 and sell it today you would lose (20.00) from holding ICICI Bank Limited or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
BANK RAKYAT IND vs. ICICI Bank Limited
Performance |
| Timeline |
| BANK RAKYAT IND |
| ICICI Bank Limited |
BANK RAKYAT and ICICI Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and ICICI Bank
The main advantage of trading using opposite BANK RAKYAT and ICICI Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT 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.| BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc |
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Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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