Correlation Between ITI and HDFC Mutual

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

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

Diversification Opportunities for ITI and HDFC Mutual

0.0

Correlation Coefficient

ITI  HDFC Mutual

Pay attention - limited upside

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

Pair Corralation between ITI and HDFC Mutual

If you would invest  30,260  in ITI Limited on August 31, 2024 and sell it today you would lose (693.00) from holding ITI Limited or give up 2.29% of portfolio value over 90 days.

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

ITI Limited  vs.  HDFC Mutual Fund

ITI Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITI Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ITI is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

HDFC Mutual Fund

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with ITI and HDFC Mutual

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

The idea behind ITI Limited and HDFC Mutual Fund 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.