Correlation Between HDFC Life and Angel One

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

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

Diversification Opportunities for HDFC Life and Angel One

-0.47

Correlation Coefficient

HDFC Life  Angel One

Very good diversification

The 3 months correlation between HDFC and Angel is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Life Insurance and Angel One Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel One Limited and HDFC Life 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 Life Insurance are associated (or correlated) with Angel One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angel One Limited has no effect on the direction of HDFC Life i.e., HDFC Life and Angel One go up and down completely randomly.

Pair Corralation between HDFC Life and Angel One

Assuming the 90 days trading horizon HDFC Life is expected to generate 3.68 times less return on investment than Angel One. But when comparing it to its historical volatility, HDFC Life Insurance is 2.03 times less risky than Angel One. It trades about 0.04 of its potential returns per unit of risk. Angel One Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  113,693  in Angel One Limited on September 29, 2024 and sell it today you would earn a total of  174,782  from holding Angel One Limited or generate 153.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

HDFC Life Insurance  vs.  Angel One Limited

HDFC Life Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

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

Angel One Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Angel One Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Angel One displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HDFC Life and Angel One

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

The idea behind HDFC Life Insurance and Angel One 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.