Correlation Between Cartrade Tech and HDFC Asset

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

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

Diversification Opportunities for Cartrade Tech and HDFC Asset

-0.17

Correlation Coefficient

Cartrade Tech  HDFC Asset

Good diversification

The 3 months correlation between Cartrade and HDFC is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cartrade Tech Limited and HDFC Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HDFC Asset Management and Cartrade Tech 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 Cartrade Tech Limited are associated (or correlated) with HDFC Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HDFC Asset Management has no effect on the direction of Cartrade Tech i.e., Cartrade Tech and HDFC Asset go up and down completely randomly.

Pair Corralation between Cartrade Tech and HDFC Asset

Assuming the 90 days trading horizon Cartrade Tech Limited is expected to generate 2.04 times more return on investment than HDFC Asset. However, Cartrade Tech is 2.04 times more volatile than HDFC Asset Management. It trades about 0.35 of its potential returns per unit of risk. HDFC Asset Management is currently generating about 0.03 per unit of risk. If you would invest  129,120  in Cartrade Tech Limited on September 28, 2024 and sell it today you would earn a total of  26,810  from holding Cartrade Tech Limited or generate 20.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Cartrade Tech Limited  vs.  HDFC Asset Management

Cartrade Tech Limited

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cartrade Tech Limited are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Cartrade Tech exhibited solid returns over the last few months and may actually be approaching a breakup point.

HDFC Asset Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HDFC Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, HDFC Asset is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cartrade Tech and HDFC Asset

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

The idea behind Cartrade Tech Limited and HDFC Asset Management 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.