Correlation Between Baazar Style and HCL Technologies

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

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

Diversification Opportunities for Baazar Style and HCL Technologies

-0.12

Correlation Coefficient

Baazar Style  HCL Technologies

Good diversification

The 3 months correlation between Baazar and HCL is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Baazar Style Retail and HCL Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCL Technologies and Baazar Style 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 Baazar Style Retail are associated (or correlated) with HCL Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCL Technologies has no effect on the direction of Baazar Style i.e., Baazar Style and HCL Technologies go up and down completely randomly.

Pair Corralation between Baazar Style and HCL Technologies

Assuming the 90 days trading horizon Baazar Style Retail is expected to under-perform the HCL Technologies. In addition to that, Baazar Style is 2.41 times more volatile than HCL Technologies Limited. It trades about -0.05 of its total potential returns per unit of risk. HCL Technologies Limited is currently generating about 0.13 per unit of volatility. If you would invest  183,840  in HCL Technologies Limited on October 7, 2024 and sell it today you would earn a total of  10,825  from holding HCL Technologies Limited or generate 5.89% return on investment over 90 days.

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

Baazar Style Retail  vs.  HCL Technologies Limited

Baazar Style Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baazar Style Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Baazar Style is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

HCL Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HCL Technologies Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, HCL Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Baazar Style and HCL Technologies

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

The idea behind Baazar Style Retail and HCL Technologies 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 Commodity Directory module to find actively traded commodities issued by global exchanges.