Correlation Between INDOFOOD AGRI and ICICI Bank
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI 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 INDOFOOD AGRI and ICICI Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INDOFOOD AGRI RES and ICICI Bank Limited, you can compare the effects of market volatilities on INDOFOOD AGRI 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 INDOFOOD AGRI with a short position of ICICI Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and ICICI Bank.
Diversification Opportunities for INDOFOOD AGRI and ICICI Bank
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between INDOFOOD and ICICI is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES 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 INDOFOOD AGRI 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 INDOFOOD AGRI RES 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 INDOFOOD AGRI i.e., INDOFOOD AGRI and ICICI Bank go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and ICICI Bank
Assuming the 90 days trading horizon INDOFOOD AGRI is expected to generate 1.55 times less return on investment than ICICI Bank. In addition to that, INDOFOOD AGRI is 1.32 times more volatile than ICICI Bank Limited. It trades about 0.04 of its total potential returns per unit of risk. ICICI Bank Limited is currently generating about 0.07 per unit of volatility. If you would invest 2,219 in ICICI Bank Limited on September 14, 2024 and sell it today you would earn a total of 781.00 from holding ICICI Bank Limited or generate 35.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. ICICI Bank Limited
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| ICICI Bank Limited |
INDOFOOD AGRI and ICICI Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and ICICI Bank
The main advantage of trading using opposite INDOFOOD AGRI and ICICI Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI 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.| INDOFOOD AGRI vs. REGAL ASIAN INVESTMENTS | INDOFOOD AGRI vs. Chuangs China Investments | INDOFOOD AGRI vs. ECHO INVESTMENT ZY | INDOFOOD AGRI vs. Apollo Investment Corp |
| ICICI Bank vs. Automatic Data Processing | ICICI Bank vs. Science Applications International | ICICI Bank vs. Zoom Video Communications | ICICI Bank vs. DATAGROUP SE |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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