Correlation Between HDFC Bank and ARDAGH METAL

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

By analyzing existing cross correlation between HDFC Bank Limited and ARDAGH METAL PACDL 0001, you can compare the effects of market volatilities on HDFC Bank and ARDAGH METAL 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 Bank with a short position of ARDAGH METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of HDFC Bank and ARDAGH METAL.

Diversification Opportunities for HDFC Bank and ARDAGH METAL

-0.25

Correlation Coefficient

HDFC Bank  ARDAGH METAL

Very good diversification

The 3 months correlation between HDFC and ARDAGH is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Bank Limited and ARDAGH METAL PACDL 0001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARDAGH METAL PACDL and HDFC Bank 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 Bank Limited are associated (or correlated) with ARDAGH METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARDAGH METAL PACDL has no effect on the direction of HDFC Bank i.e., HDFC Bank and ARDAGH METAL go up and down completely randomly.

Pair Corralation between HDFC Bank and ARDAGH METAL

Assuming the 90 days trading horizon HDFC Bank Limited is expected to generate 0.46 times more return on investment than ARDAGH METAL. However, HDFC Bank Limited is 2.16 times less risky than ARDAGH METAL. It trades about 0.14 of its potential returns per unit of risk. ARDAGH METAL PACDL 0001 is currently generating about -0.07 per unit of risk. If you would invest  5,450  in HDFC Bank Limited on October 9, 2024 and sell it today you would earn a total of  750.00  from holding HDFC Bank Limited or generate 13.76% return on investment over 90 days.

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

HDFC Bank Limited  vs.  ARDAGH METAL PACDL 0001

HDFC Bank Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HDFC Bank Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, HDFC Bank reported solid returns over the last few months and may actually be approaching a breakup point.

ARDAGH METAL PACDL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARDAGH METAL PACDL 0001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with HDFC Bank and ARDAGH METAL

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

The idea behind HDFC Bank Limited and ARDAGH METAL PACDL 0001 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.