Correlation Between Icici Bank and Banco Latinoamericano

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

Diversification Opportunities for Icici Bank and Banco Latinoamericano

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Icici and Banco is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Icici Bank Ltd and Banco Latinoamericano DE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Latinoamericano 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 are associated (or correlated) with Banco Latinoamericano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Latinoamericano has no effect on the direction of Icici Bank i.e., Icici Bank and Banco Latinoamericano go up and down completely randomly.

Pair Corralation between Icici Bank and Banco Latinoamericano

Considering the 90-day investment horizon Icici Bank is expected to generate 0.77 times more return on investment than Banco Latinoamericano. However, Icici Bank is 1.3 times less risky than Banco Latinoamericano. It trades about -0.12 of its potential returns per unit of risk. Banco Latinoamericano DE is currently generating about -0.23 per unit of risk. If you would invest  2,195  in Icici Bank on July 3, 2022 and sell it today you would lose (98.00)  from holding Icici Bank or give up 4.46% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Icici Bank Ltd  vs.  Banco Latinoamericano DE

 Performance (%) 
       Timeline  
Icici Bank 
Icici Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Icici Bank are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Icici Bank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Icici Price Channel

Banco Latinoamericano 
Banco Performance
0 of 100
Over the last 90 days Banco Latinoamericano DE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Banco Latinoamericano is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Banco Price Channel

Icici Bank and Banco Latinoamericano Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Icici Bank and Banco Latinoamericano

The main advantage of trading using opposite Icici Bank and Banco Latinoamericano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icici Bank position performs unexpectedly, Banco Latinoamericano 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 Banco Latinoamericano will offset losses from the drop in Banco Latinoamericano's long position.
Icici Bank vs. Amazon Inc
The idea behind Icici Bank and Banco Latinoamericano DE 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.
Banco Latinoamericano vs. Amazon Inc
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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