Correlation Between DBS Group and ICICI Bank

Can any of the company-specific risk be diversified away by investing in both DBS Group 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 DBS Group and ICICI Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DBS Group Holdings and ICICI Bank Limited, you can compare the effects of market volatilities on DBS Group 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 DBS Group with a short position of ICICI Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBS Group and ICICI Bank.

Diversification Opportunities for DBS Group and ICICI Bank

0.19

Correlation Coefficient

DBS Group  ICICI Bank

Average diversification

The 3 months correlation between DBS and ICICI is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding DBS Group Holdings 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 DBS Group 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 DBS Group Holdings 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 DBS Group i.e., DBS Group and ICICI Bank go up and down completely randomly.

Pair Corralation between DBS Group and ICICI Bank

Assuming the 90 days trading horizon DBS Group Holdings is expected to generate 0.84 times more return on investment than ICICI Bank. However, DBS Group Holdings is 1.2 times less risky than ICICI Bank. It trades about 0.18 of its potential returns per unit of risk. ICICI Bank Limited is currently generating about -0.02 per unit of risk. If you would invest  2,742  in DBS Group Holdings on April 20, 2025 and sell it today you would earn a total of  406.00  from holding DBS Group Holdings or generate 14.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

DBS Group Holdings  vs.  ICICI Bank Limited

DBS Group Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DBS Group Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, DBS Group reported solid returns over the last few months and may actually be approaching a breakup point.

ICICI Bank Limited

Risk-Adjusted Performance

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 nearly stable fundamental drivers, ICICI Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DBS Group and ICICI Bank

The main advantage of trading using opposite DBS Group and ICICI Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBS Group 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.

The idea behind DBS Group Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.