Correlation Between Oriental Carbon and HDFC Asset

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

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

Diversification Opportunities for Oriental Carbon and HDFC Asset

0.66

Correlation Coefficient

Oriental Carbon  HDFC Asset

Poor diversification

The 3 months correlation between Oriental and HDFC is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Carbon Chemicals 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 Oriental Carbon 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 Oriental Carbon Chemicals 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 Oriental Carbon i.e., Oriental Carbon and HDFC Asset go up and down completely randomly.

Pair Corralation between Oriental Carbon and HDFC Asset

Assuming the 90 days trading horizon Oriental Carbon Chemicals is expected to under-perform the HDFC Asset. In addition to that, Oriental Carbon is 2.83 times more volatile than HDFC Asset Management. It trades about -0.04 of its total potential returns per unit of risk. HDFC Asset Management is currently generating about 0.04 per unit of volatility. If you would invest  344,021  in HDFC Asset Management on October 9, 2024 and sell it today you would earn a total of  63,149  from holding HDFC Asset Management or generate 18.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.59%
Values	Daily Returns

Oriental Carbon Chemicals  vs.  HDFC Asset Management

Oriental Carbon Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oriental Carbon Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 rather sound basic indicators, HDFC Asset is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Oriental Carbon and HDFC Asset

The main advantage of trading using opposite Oriental Carbon and HDFC Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oriental Carbon 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 Oriental Carbon Chemicals 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.