Correlation Between Bajaj Holdings and Hindustan Media

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

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

Diversification Opportunities for Bajaj Holdings and Hindustan Media

0.38

Correlation Coefficient

Bajaj Holdings  Hindustan Media

Weak diversification

The 3 months correlation between Bajaj and Hindustan is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bajaj Holdings Investment 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 Bajaj Holdings 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 Bajaj Holdings Investment 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 Bajaj Holdings i.e., Bajaj Holdings and Hindustan Media go up and down completely randomly.

Pair Corralation between Bajaj Holdings and Hindustan Media

Assuming the 90 days trading horizon Bajaj Holdings Investment is expected to generate 1.6 times more return on investment than Hindustan Media. However, Bajaj Holdings is 1.6 times more volatile than Hindustan Media Ventures. It trades about 0.07 of its potential returns per unit of risk. Hindustan Media Ventures is currently generating about -0.03 per unit of risk. If you would invest  1,020,300  in Bajaj Holdings Investment on October 26, 2024 and sell it today you would earn a total of  108,710  from holding Bajaj Holdings Investment or generate 10.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bajaj Holdings Investment  vs.  Hindustan Media Ventures

Bajaj Holdings Investment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bajaj Holdings Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, Bajaj Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bajaj Holdings and Hindustan Media

The main advantage of trading using opposite Bajaj Holdings and Hindustan Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bajaj Holdings 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 Bajaj Holdings Investment 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.