Correlation Between Bharatiya Global and HDFC Bank

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

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

Diversification Opportunities for Bharatiya Global and HDFC Bank

-0.42

Correlation Coefficient

Bharatiya Global  HDFC Bank

Very good diversification

The 3 months correlation between Bharatiya and HDFC is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bharatiya Global Infomedia and HDFC Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HDFC Bank Limited and Bharatiya Global 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 Bharatiya Global Infomedia are associated (or correlated) with HDFC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HDFC Bank Limited has no effect on the direction of Bharatiya Global i.e., Bharatiya Global and HDFC Bank go up and down completely randomly.

Pair Corralation between Bharatiya Global and HDFC Bank

Assuming the 90 days trading horizon Bharatiya Global Infomedia is expected to under-perform the HDFC Bank. In addition to that, Bharatiya Global is 2.01 times more volatile than HDFC Bank Limited. It trades about -0.19 of its total potential returns per unit of risk. HDFC Bank Limited is currently generating about 0.01 per unit of volatility. If you would invest  179,825  in HDFC Bank Limited on December 27, 2024 and sell it today you would earn a total of  830.00  from holding HDFC Bank Limited or generate 0.46% return on investment over 90 days.

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

Bharatiya Global Infomedia  vs.  HDFC Bank Limited

Bharatiya Global Inf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bharatiya Global Infomedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

HDFC Bank Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days HDFC Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, HDFC Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bharatiya Global and HDFC Bank

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

The idea behind Bharatiya Global Infomedia and HDFC 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.