Correlation Between HDFC Life and Associated Alcohols

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

Diversification Opportunities for HDFC Life and Associated Alcohols

HDFCAssociatedDiversified AwayHDFCAssociatedDiversified Away100%
-0.86
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between HDFC and Associated is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Life Insurance and Associated Alcohols Breweries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Alcohols 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 Associated Alcohols. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Alcohols has no effect on the direction of HDFC Life i.e., HDFC Life and Associated Alcohols go up and down completely randomly.

Pair Corralation between HDFC Life and Associated Alcohols

Assuming the 90 days trading horizon HDFC Life Insurance is expected to under-perform the Associated Alcohols. But the stock apears to be less risky and, when comparing its historical volatility, HDFC Life Insurance is 1.81 times less risky than Associated Alcohols. The stock trades about -0.14 of its potential returns per unit of risk. The Associated Alcohols Breweries is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  91,480  in Associated Alcohols Breweries on October 21, 2024 and sell it today you would earn a total of  23,745  from holding Associated Alcohols Breweries or generate 25.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

HDFC Life Insurance  vs.  Associated Alcohols Breweries

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -15-10-505101520
JavaScript chart by amCharts 3.21.15HDFCLIFE ASALCBR
       Timeline  
HDFC Life Insurance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan600620640660680700720740
Associated Alcohols 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Associated Alcohols Breweries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental indicators, Associated Alcohols reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan8509009501,0001,0501,1001,1501,200

HDFC Life and Associated Alcohols Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.71-2.03-1.35-0.670.01030.621.241.862.48 0.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15HDFCLIFE ASALCBR
       Returns  

Pair Trading with HDFC Life and Associated Alcohols

The main advantage of trading using opposite HDFC Life and Associated Alcohols positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HDFC Life position performs unexpectedly, Associated Alcohols 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 Associated Alcohols will offset losses from the drop in Associated Alcohols' long position.
The idea behind HDFC Life Insurance and Associated Alcohols Breweries 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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