Correlation Between PB Fintech and HDFC Life

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

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

Diversification Opportunities for PB Fintech and HDFC Life

-0.18

Correlation Coefficient

PB Fintech  HDFC Life

Good diversification

The 3 months correlation between POLICYBZR and HDFC is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding PB Fintech Limited and HDFC Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HDFC Life Insurance and PB Fintech 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 PB Fintech Limited are associated (or correlated) with HDFC Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HDFC Life Insurance has no effect on the direction of PB Fintech i.e., PB Fintech and HDFC Life go up and down completely randomly.

Pair Corralation between PB Fintech and HDFC Life

Assuming the 90 days trading horizon PB Fintech Limited is expected to under-perform the HDFC Life. In addition to that, PB Fintech is 2.31 times more volatile than HDFC Life Insurance. It trades about -0.09 of its total potential returns per unit of risk. HDFC Life Insurance is currently generating about 0.11 per unit of volatility. If you would invest  61,740  in HDFC Life Insurance on December 28, 2024 and sell it today you would earn a total of  6,450  from holding HDFC Life Insurance or generate 10.45% return on investment over 90 days.

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

PB Fintech Limited  vs.  HDFC Life Insurance

PB Fintech Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days PB Fintech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

HDFC Life Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HDFC Life Insurance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, HDFC Life may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PB Fintech and HDFC Life

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

The idea behind PB Fintech Limited and HDFC Life Insurance 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.