Correlation Between Kaushalya Infrastructure and HDFC Asset

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

By analyzing existing cross correlation between Kaushalya Infrastructure Development and HDFC Asset Management, you can compare the effects of market volatilities on Kaushalya Infrastructure and HDFC Asset 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 Kaushalya Infrastructure with a short position of HDFC Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaushalya Infrastructure and HDFC Asset.

Diversification Opportunities for Kaushalya Infrastructure and HDFC Asset

-0.27

Correlation Coefficient

Kaushalya Infrastructure  HDFC Asset

Very good diversification

The 3 months correlation between Kaushalya and HDFC is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kaushalya Infrastructure Devel and HDFC Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HDFC Asset Management and Kaushalya Infrastructure 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 Kaushalya Infrastructure Development are associated (or correlated) with HDFC Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HDFC Asset Management has no effect on the direction of Kaushalya Infrastructure i.e., Kaushalya Infrastructure and HDFC Asset go up and down completely randomly.

Pair Corralation between Kaushalya Infrastructure and HDFC Asset

Assuming the 90 days trading horizon Kaushalya Infrastructure Development is expected to generate 4.43 times more return on investment than HDFC Asset. However, Kaushalya Infrastructure is 4.43 times more volatile than HDFC Asset Management. It trades about 0.08 of its potential returns per unit of risk. HDFC Asset Management is currently generating about -0.57 per unit of risk. If you would invest  96,180  in Kaushalya Infrastructure Development on October 14, 2024 and sell it today you would earn a total of  6,855  from holding Kaushalya Infrastructure Development or generate 7.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Kaushalya Infrastructure Devel  vs.  HDFC Asset Management

Kaushalya Infrastructure

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kaushalya Infrastructure Development are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Kaushalya Infrastructure may actually be approaching a critical reversion point that can send shares even higher in February 2025.

HDFC Asset Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HDFC Asset Management 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 basic 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 Kaushalya Infrastructure and HDFC Asset

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

The idea behind Kaushalya Infrastructure Development and HDFC Asset Management 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.