Correlation Between ICICI Bank and CapitaLand Investment
Can any of the company-specific risk be diversified away by investing in both ICICI Bank and CapitaLand Investment 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 Bank and CapitaLand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICICI Bank Limited and CapitaLand Investment Limited, you can compare the effects of market volatilities on ICICI Bank and CapitaLand Investment 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 Bank with a short position of CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICICI Bank and CapitaLand Investment.
Diversification Opportunities for ICICI Bank and CapitaLand Investment
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between ICICI and CapitaLand is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Bank Limited and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and ICICI Bank 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 Bank Limited are associated (or correlated) with CapitaLand Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CapitaLand Investment has no effect on the direction of ICICI Bank i.e., ICICI Bank and CapitaLand Investment go up and down completely randomly.
Pair Corralation between ICICI Bank and CapitaLand Investment
Assuming the 90 days trading horizon ICICI Bank Limited is expected to generate 0.95 times more return on investment than CapitaLand Investment. However, ICICI Bank Limited is 1.05 times less risky than CapitaLand Investment. It trades about 0.11 of its potential returns per unit of risk. CapitaLand Investment Limited is currently generating about -0.05 per unit of risk. If you would invest 2,840 in ICICI Bank Limited on September 1, 2024 and sell it today you would earn a total of 80.00 from holding ICICI Bank Limited or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICICI Bank Limited vs. CapitaLand Investment Limited
Performance |
| Timeline |
| ICICI Bank Limited |
| CapitaLand Investment |
ICICI Bank and CapitaLand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICICI Bank and CapitaLand Investment
The main advantage of trading using opposite ICICI Bank and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICICI Bank position performs unexpectedly, CapitaLand Investment 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 CapitaLand Investment will offset losses from the drop in CapitaLand Investment's long position.| ICICI Bank vs. PennyMac Mortgage Investment | ICICI Bank vs. Tencent Music Entertainment | ICICI Bank vs. New Residential Investment | ICICI Bank vs. WT OFFSHORE |
| CapitaLand Investment vs. CBRE Group Class | CapitaLand Investment vs. Superior Plus Corp | CapitaLand Investment vs. NMI Holdings | CapitaLand Investment vs. Origin Agritech |
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 Stocks Directory module to find actively traded stocks across global markets.
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