Correlation Between Sasken Technologies and HDFC Bank

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

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

Diversification Opportunities for Sasken Technologies and HDFC Bank

0.49

Correlation Coefficient

Sasken Technologies  HDFC Bank

Very weak diversification

The 3 months correlation between Sasken and HDFC is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sasken Technologies Limited and HDFC Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HDFC Bank Limited and Sasken Technologies 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 Sasken Technologies Limited are associated (or correlated) with HDFC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HDFC Bank Limited has no effect on the direction of Sasken Technologies i.e., Sasken Technologies and HDFC Bank go up and down completely randomly.

Pair Corralation between Sasken Technologies and HDFC Bank

Assuming the 90 days trading horizon Sasken Technologies Limited is expected to under-perform the HDFC Bank. In addition to that, Sasken Technologies is 2.85 times more volatile than HDFC Bank Limited. It trades about -0.15 of its total potential returns per unit of risk. HDFC Bank Limited is currently generating about -0.05 per unit of volatility. If you would invest  180,470  in HDFC Bank Limited on December 2, 2024 and sell it today you would lose (7,230) from holding HDFC Bank Limited or give up 4.01% of portfolio value over 90 days.

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

Sasken Technologies Limited  vs.  HDFC Bank Limited

Sasken Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sasken Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals 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 Bank Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days HDFC Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, HDFC Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sasken Technologies and HDFC Bank

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

The idea behind Sasken Technologies Limited and HDFC Bank Limited 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.