Correlation Between Dhunseri Investments and HDFC Asset

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

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

Diversification Opportunities for Dhunseri Investments and HDFC Asset

-0.08

Correlation Coefficient

Dhunseri Investments  HDFC Asset

Good diversification

The 3 months correlation between Dhunseri and HDFC is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dhunseri Investments Limited 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 Dhunseri Investments 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 Dhunseri Investments Limited 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 Dhunseri Investments i.e., Dhunseri Investments and HDFC Asset go up and down completely randomly.

Pair Corralation between Dhunseri Investments and HDFC Asset

Assuming the 90 days trading horizon Dhunseri Investments Limited is expected to generate 2.66 times more return on investment than HDFC Asset. However, Dhunseri Investments is 2.66 times more volatile than HDFC Asset Management. It trades about 0.12 of its potential returns per unit of risk. HDFC Asset Management is currently generating about -0.03 per unit of risk. If you would invest  177,180  in Dhunseri Investments Limited on August 31, 2024 and sell it today you would earn a total of  56,415  from holding Dhunseri Investments Limited or generate 31.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Dhunseri Investments Limited  vs.  HDFC Asset Management

Dhunseri Investments

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dhunseri Investments Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, Dhunseri Investments showed solid returns over the last few months and may actually be approaching a breakup point.

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dhunseri Investments and HDFC Asset

The main advantage of trading using opposite Dhunseri Investments and HDFC Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dhunseri Investments 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 Dhunseri Investments Limited 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.