Correlation Between HDFC Asset and Hindustan Media

Can any of the company-specific risk be diversified away by investing in both HDFC Asset and Hindustan Media 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 HDFC Asset and Hindustan Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HDFC Asset Management and Hindustan Media Ventures, you can compare the effects of market volatilities on HDFC Asset and Hindustan Media 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 HDFC Asset with a short position of Hindustan Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of HDFC Asset and Hindustan Media.

Diversification Opportunities for HDFC Asset and Hindustan Media

0.0

Correlation Coefficient

HDFC Asset  Hindustan Media

Pay attention - limited upside

The 3 months correlation between HDFC and Hindustan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Asset Management and Hindustan Media Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Media Ventures and HDFC Asset 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 HDFC Asset Management are associated (or correlated) with Hindustan Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Media Ventures has no effect on the direction of HDFC Asset i.e., HDFC Asset and Hindustan Media go up and down completely randomly.

Pair Corralation between HDFC Asset and Hindustan Media

Assuming the 90 days trading horizon HDFC Asset Management is expected to generate 0.67 times more return on investment than Hindustan Media. However, HDFC Asset Management is 1.5 times less risky than Hindustan Media. It trades about 0.15 of its potential returns per unit of risk. Hindustan Media Ventures is currently generating about 0.07 per unit of risk. If you would invest  188,370  in HDFC Asset Management on March 28, 2024 and sell it today you would earn a total of  216,065  from holding HDFC Asset Management or generate 114.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.62%
Values	Daily Returns

HDFC Asset Management  vs.  Hindustan Media Ventures

HDFC Asset Management

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HDFC Asset Management are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, HDFC Asset may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Hindustan Media Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hindustan Media Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hindustan Media is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with HDFC Asset and Hindustan Media

The main advantage of trading using opposite HDFC Asset and Hindustan Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HDFC Asset position performs unexpectedly, Hindustan Media 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 Hindustan Media will offset losses from the drop in Hindustan Media's long position.

The idea behind HDFC Asset Management and Hindustan Media Ventures 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.