Correlation Between HCL Technologies and Bharat Road

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

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

Diversification Opportunities for HCL Technologies and Bharat Road

-0.12

Correlation Coefficient

HCL Technologies  Bharat Road

Good diversification

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

Pair Corralation between HCL Technologies and Bharat Road

Assuming the 90 days trading horizon HCL Technologies Limited is expected to generate 0.54 times more return on investment than Bharat Road. However, HCL Technologies Limited is 1.86 times less risky than Bharat Road. It trades about 0.16 of its potential returns per unit of risk. Bharat Road Network is currently generating about 0.0 per unit of risk. If you would invest  174,507  in HCL Technologies Limited on September 18, 2024 and sell it today you would earn a total of  20,933  from holding HCL Technologies Limited or generate 12.0% return on investment over 90 days.

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

HCL Technologies Limited  vs.  Bharat Road Network

HCL Technologies

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HCL Technologies Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical and fundamental indicators, HCL Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bharat Road Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bharat Road Network has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bharat Road is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with HCL Technologies and Bharat Road

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

The idea behind HCL Technologies Limited and Bharat Road Network 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.