Correlation Between Microchip Technology and ICICI Bank

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

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

Diversification Opportunities for Microchip Technology and ICICI Bank

0.0

Correlation Coefficient

Microchip Technology  ICICI Bank

Pay attention - limited upside

The 3 months correlation between Microchip and ICICI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microchip Technology Incorpora 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 Microchip Technology 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 Microchip Technology Incorporated 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 Microchip Technology i.e., Microchip Technology and ICICI Bank go up and down completely randomly.

Pair Corralation between Microchip Technology and ICICI Bank

Assuming the 90 days trading horizon Microchip Technology Incorporated is expected to generate 2.19 times more return on investment than ICICI Bank. However, Microchip Technology is 2.19 times more volatile than ICICI Bank Limited. It trades about 0.34 of its potential returns per unit of risk. ICICI Bank Limited is currently generating about 0.05 per unit of risk. If you would invest  11,597  in Microchip Technology Incorporated on April 20, 2025 and sell it today you would earn a total of  9,256  from holding Microchip Technology Incorporated or generate 79.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Microchip Technology Incorpora  vs.  ICICI Bank Limited

Microchip Technology

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Microchip Technology Incorporated are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Microchip Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

ICICI Bank Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICICI Bank Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, ICICI Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Microchip Technology and ICICI Bank

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

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.