Correlation Between HDFC Bank and AXISCADES Technologies

Can any of the company-specific risk be diversified away by investing in both HDFC Bank and AXISCADES Technologies 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 AXISCADES Technologies 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 AXISCADES Technologies Limited, you can compare the effects of market volatilities on HDFC Bank and AXISCADES Technologies 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 AXISCADES Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of HDFC Bank and AXISCADES Technologies.

Diversification Opportunities for HDFC Bank and AXISCADES Technologies

0.01

Correlation Coefficient

HDFC Bank  AXISCADES Technologies

Significant diversification

The 3 months correlation between HDFC and AXISCADES is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Bank Limited and AXISCADES Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXISCADES Technologies 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 AXISCADES Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXISCADES Technologies has no effect on the direction of HDFC Bank i.e., HDFC Bank and AXISCADES Technologies go up and down completely randomly.

Pair Corralation between HDFC Bank and AXISCADES Technologies

Assuming the 90 days trading horizon HDFC Bank is expected to generate 1.04 times less return on investment than AXISCADES Technologies. But when comparing it to its historical volatility, HDFC Bank Limited is 2.69 times less risky than AXISCADES Technologies. It trades about 0.1 of its potential returns per unit of risk. AXISCADES Technologies Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  54,045  in AXISCADES Technologies Limited on September 18, 2024 and sell it today you would earn a total of  2,795  from holding AXISCADES Technologies Limited or generate 5.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

HDFC Bank Limited  vs.  AXISCADES Technologies Limited

HDFC Bank Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HDFC Bank Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, HDFC Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AXISCADES Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AXISCADES Technologies Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, AXISCADES Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HDFC Bank and AXISCADES Technologies

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

The idea behind HDFC Bank Limited and AXISCADES Technologies 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.