Correlation Between Rico Auto and ICICI Bank

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Can any of the company-specific risk be diversified away by investing in both Rico Auto 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 Rico Auto and ICICI Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rico Auto Industries and ICICI Bank Limited, you can compare the effects of market volatilities on Rico Auto 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 Rico Auto with a short position of ICICI Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rico Auto and ICICI Bank.

Diversification Opportunities for Rico Auto and ICICI Bank

-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between Rico and ICICI is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Rico Auto Industries 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 Rico Auto 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 Rico Auto Industries 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 Rico Auto i.e., Rico Auto and ICICI Bank go up and down completely randomly.

Pair Corralation between Rico Auto and ICICI Bank

Assuming the 90 days trading horizon Rico Auto is expected to generate 2.19 times less return on investment than ICICI Bank. In addition to that, Rico Auto is 2.67 times more volatile than ICICI Bank Limited. It trades about 0.02 of its total potential returns per unit of risk. ICICI Bank Limited is currently generating about 0.09 per unit of volatility. If you would invest  98,983  in ICICI Bank Limited on September 24, 2024 and sell it today you would earn a total of  29,857  from holding ICICI Bank Limited or generate 30.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.18%
ValuesDaily Returns

Rico Auto Industries  vs.  ICICI Bank Limited

 Performance 
       Timeline  
Rico Auto Industries 

Risk-Adjusted Performance

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Over the last 90 days Rico Auto Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 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

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Weak
 
Strong
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 basic indicators, ICICI Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rico Auto and ICICI Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rico Auto and ICICI Bank

The main advantage of trading using opposite Rico Auto and ICICI Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rico Auto 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.
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The idea behind Rico Auto Industries 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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