Correlation Between MAS Financial and HDFC Asset

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

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

Diversification Opportunities for MAS Financial and HDFC Asset

0.83

Correlation Coefficient

MAS Financial  HDFC Asset

Very poor diversification

The 3 months correlation between MAS and HDFC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding MAS Financial Services 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 MAS Financial 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 MAS Financial Services 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 MAS Financial i.e., MAS Financial and HDFC Asset go up and down completely randomly.

Pair Corralation between MAS Financial and HDFC Asset

Assuming the 90 days trading horizon MAS Financial Services is expected to under-perform the HDFC Asset. In addition to that, MAS Financial is 1.21 times more volatile than HDFC Asset Management. It trades about 0.0 of its total potential returns per unit of risk. HDFC Asset Management is currently generating about 0.01 per unit of volatility. If you would invest  368,865  in HDFC Asset Management on November 29, 2024 and sell it today you would earn a total of  15.00  from holding HDFC Asset Management or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

MAS Financial Services  vs.  HDFC Asset Management

MAS Financial Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days MAS Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

HDFC Asset Management

Risk-Adjusted Performance

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 latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with MAS Financial and HDFC Asset

The main advantage of trading using opposite MAS Financial and HDFC Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAS Financial 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 MAS Financial Services 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.