Correlation Between ICICI Bank and Indian Hotels
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By analyzing existing cross correlation between ICICI Bank Limited and The Indian Hotels, you can compare the effects of market volatilities on ICICI Bank and Indian Hotels 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 Indian Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICICI Bank and Indian Hotels.
Diversification Opportunities for ICICI Bank and Indian Hotels
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ICICI and Indian is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Bank Limited and The Indian Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Hotels 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 Indian Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Hotels has no effect on the direction of ICICI Bank i.e., ICICI Bank and Indian Hotels go up and down completely randomly.
Pair Corralation between ICICI Bank and Indian Hotels
Assuming the 90 days trading horizon ICICI Bank Limited is expected to generate 0.46 times more return on investment than Indian Hotels. However, ICICI Bank Limited is 2.19 times less risky than Indian Hotels. It trades about -0.32 of its potential returns per unit of risk. The Indian Hotels is currently generating about -0.18 per unit of risk. If you would invest 130,755 in ICICI Bank Limited on October 28, 2024 and sell it today you would lose (9,835) from holding ICICI Bank Limited or give up 7.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICICI Bank Limited vs. The Indian Hotels
Performance |
| Timeline |
| ICICI Bank Limited |
| Indian Hotels |
ICICI Bank and Indian Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICICI Bank and Indian Hotels
The main advantage of trading using opposite ICICI Bank and Indian Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICICI Bank position performs unexpectedly, Indian Hotels 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 Indian Hotels will offset losses from the drop in Indian Hotels' long position.| ICICI Bank vs. LT Technology Services | ICICI Bank vs. 21st Century Management | ICICI Bank vs. Indian Metals Ferro | ICICI Bank vs. UTI Asset Management |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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