Correlation Between HDFC Mutual and ITI

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

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

Diversification Opportunities for HDFC Mutual and ITI

0.0

Correlation Coefficient

HDFC Mutual  ITI

Pay attention - limited upside

The 3 months correlation between HDFC and ITI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Mutual Fund and ITI Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITI Limited and HDFC Mutual 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 Mutual Fund are associated (or correlated) with ITI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITI Limited has no effect on the direction of HDFC Mutual i.e., HDFC Mutual and ITI go up and down completely randomly.

Pair Corralation between HDFC Mutual and ITI

If you would invest  28,663  in ITI Limited on November 29, 2024 and sell it today you would lose (1,403) from holding ITI Limited or give up 4.89% of portfolio value over 90 days.

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

HDFC Mutual Fund  vs.  ITI Limited

HDFC Mutual Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days HDFC Mutual Fund has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, HDFC Mutual is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

ITI Limited

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ITI Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, ITI is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with HDFC Mutual and ITI

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

The idea behind HDFC Mutual Fund and ITI 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.