Correlation Between HDFC Bank and Infomedia Press

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

Diversification Opportunities for HDFC Bank and Infomedia Press

-0.43

Correlation Coefficient

HDFC Bank  Infomedia Press

Very good diversification

The 3 months correlation between HDFC and Infomedia is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Bank Limited and Infomedia Press Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infomedia Press 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 Infomedia Press. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infomedia Press has no effect on the direction of HDFC Bank i.e., HDFC Bank and Infomedia Press go up and down completely randomly.

Pair Corralation between HDFC Bank and Infomedia Press

Assuming the 90 days trading horizon HDFC Bank Limited is expected to generate 0.4 times more return on investment than Infomedia Press. However, HDFC Bank Limited is 2.52 times less risky than Infomedia Press. It trades about 0.11 of its potential returns per unit of risk. Infomedia Press Limited is currently generating about -0.1 per unit of risk. If you would invest  161,780  in HDFC Bank Limited on October 6, 2024 and sell it today you would earn a total of  13,140  from holding HDFC Bank Limited or generate 8.12% return on investment over 90 days.

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

HDFC Bank Limited  vs.  Infomedia Press 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 inconsistent basic indicators, HDFC Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Infomedia Press

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infomedia Press Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with HDFC Bank and Infomedia Press

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

The idea behind HDFC Bank Limited and Infomedia Press 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.